What Is a Retail Fore✃ign Exchange Dealer (RFED)?

A retail foreign exchange dealer (RFED) acts as a counterparty to an off-exchange, over-the-counter (OTC) foreignꦿ currency transaction where buying and selling💟 of financial instruments do not involve any of the exchanges.

Understan🐈ding Retꦫail Foreign Exchange Dealers (RFEDs)

Retail foreign exchange dealers complete forex transactions, 澳洲幸运5官方开奖结果体彩网:futures contracts, options on futures contracts, and options contracts for people who are not eligible to execute these transactions elsewhere. The transaction can be leveraged, margined, or financed by other means. Financing may come from a 澳洲幸运5官方开奖结果体彩网:counterparty, the offeror, or a third party working for these ind𒁏ividuals. Transactions of this typ🦹e are usually over-the-counter, off-exchange spot trades.

While the 澳洲幸运5官方开奖结果体彩网:Commodജity Futures Trading Commission (CFTC) does not directly regulate these trades, they do set limitations on who may handle the transactions. Retail foreign exchange dealers are required to become members of the 澳洲幸运5官方开奖结果体彩网:National Futures Association (NFA), in order to conduct business with the public. RFEDs can be an individual🍰 or organization.

Foreign exchange futures contracts usually trade on recognized and regulated marketplaces and in the 澳洲幸运5官方开奖结果体彩网:interbank market. The interbank market is the global network utilized by financial institutions to trade large amounts of currencies between themselves and is not open for retail trading. For retail traders, most deals will be on either a CFTC or 澳洲幸运5官方开奖结果体彩网:Securities and Exchange Commission (SEC) controlled site. However, it is possible to utilize an o𒉰ff-exchange or over-the-counter♊ (OTC) marketplace offered by a retail foreign exchange dealer.

OTC trades happen directly between two parties, such as an individual and an 澳洲幸运5官方开奖结果体彩网:authorized forex dealer or broker. A 澳洲幸运5官方开奖结果体彩网:clearinghouse is not involved in the order process. These off-exchange trades are primarily done electronically or over the telephone. Retail foreign exchange dealers act as 澳洲幸运5官方开奖结果体彩网:market makers between individuals and 🌠will charge a fee for their services. While there is some oversight of RFEDs, many of the standard SEC rules for brokers and dealers might not apply to forex transactions.

Regulation of Retail Foreign Exchange Dealers

The National Futures Association (NFA) regulates and oversees foreign exchange transactions. It is their responsibility to ensure that everyone is doing business legally and under regulation. The NFA's history can be traced back to 1974 when Congress established the Commodity Futures Trading Commission.

The legislation that created the CFTCꦅ also gave rise to the creation of a registered futures association, which allowed for the format⛦ion of a self-regulatory organization. In 1981, Congress designated the NFA as official, and the NFA began its oversight operations in 1982.

RFEDs are also required to have at least one principal who is a forex-澳洲幸运5官方开奖结果体彩网:associated person. An associated person is someone who solicits ord🤡ers, customers, or customer funds, or who supervises persons involved in these types of jobs. The forex-associated person will also have to adhere to the rules of the NFA and may have to submit paperwork, including fiꦿngerprints.

According to the NFA, interested persons must register with the site, complete an application, adhere to compliance requirements, and pay non-refundable application and membership fees. Other conditions include submitting fingerprint identification and demonstrating proficiency at trading in foreign exchange. The NFA has ꧃also said all forex-associated💙 persons must pass a new exam.