Government and self-regulation of foreign exchange market

Government and self-regulation
For many years, the foreign exchange industry was unregulated in the United States. Regulation was long overdue, especially in light of the fact that foreign exchange trading had been regulated in such locales as Hong Kong and London for over a decade. Some rules were formally put in place when the President signed and Congress passed the Commodities Futures Modernization Act in December 2000, which regulated the retail foreign exchange industry for the first time.
In the U.S., forex firms are members of the CFTC and the self-regulating National Futures Association (NFA) , operating under the same guidelines set forth for FCMs in the futures brokerage business. Other developed countries have effectively regulated the OTC foreign exchange market, and each member believes that the U.S. can do this as well.
On a regular basis, all forex dealers submit financial reports to its regulators and are subject to lengthy regulatory audits covering everything from marketing practices to employee training regimens. In addition, many of these long-established regulatory bodies extend specific regulations solely to retail forex dealers, such as higher capital requirements, disclosure statements and the requirement that all dealers disclose to customers that their funds may not be safe in the event of bankruptcy.

Worldwide leaders in technology
The retail forex market has thrived since its inception. The entrepreneurial members of the FXDC that began this industry have continued to push each other and push the envelope, expanding their reach to more than 140 countries to compete and excel in the global marketplace. This very competition has benefited individuals in service and value as market technology rapidly evolves to provide traders with the latest equipment and tools for online trading.
What’s more is that the leading forex companies have become global leaders; the dominant players in the forex market are based in the United States. These companies took the age-old process of on-exchange trading and shaped it into something new. The fast-paced nature of the industry has led to rapid innovations in technology; customers can now monitor and trade the markets 24 hours a day while placing orders almost instantly with sophisticated desktop trading software, from any computer via a web browser, or even from their mobile phones.

Acceptance among investors
The retail forex trading community provides a service that the global banking community cannot. Since forex dealers were originally intended to serve individual traders, they can provide around-the-clock service while managing risk to give customers consistent pricing and market liquidity, 24 hours a day. This is something that even the largest banks cannot provide 24 hours a day: to constantly deliver competitive prices day or night to individual traders.
These small forex dealer startups have evolved into major global financial institutions, yet their commitment to innovation and customer service allows everyday citizens to access the world’s prime market, all because of the emergence of online technologies and the determination of a few dedicated leaders.