The Commodity Futures Trading Commission (CFTC) regulates all Forex brokers which are legally allowed to market their services in the U.S., along with the National Futures Association (NFA). Most Forex traders in the U.S. choose to open their accounts with CFTC-regulated Forex brokers. I have created a shortlist for you of the best CFTC-regulated Forex brokers. Read on to view my shortlist and to learn how the CFTC can protect you plus the pros and cons of opening an account with a CFTC-regulated broker compared to an offshore broker.
- Plus500, multi-asset and CFD broker.
- Forex.com, Excellent trading conditions + NFA regulation.
- OANDA, Solid services + excellent currency converter.
- IG Markets, No withdrawal fee.
- Interactive Brokers, suits demanding traders and algorithmic strategies.
Best CFTC Brokers Comparison
| | | | | |
Regulators | ASIC, CySEC, FCA, FMA, FSCA, MAS | ASIC, CFTC, CIMA, CySEC, FCA, FSA, IIROC, NFA | ASIC, BVIFSC, CFTC, FCA, FSA, IIROC, MAS, MFSA | FCA | N/A |
Year Established | 2008 | 2001 | 1996 | 1974 | 1978 |
Execution Type(s) | Market Maker | Market Maker | ECN/STP, Market Maker, Matched Principal Broker | Market Maker | ECN/STP, No Dealing Desk |
Minimum Deposit | |||||
Average Trading Cost EUR/USD | 1.3 pips | 1.1 pips | 0.9 pips | 0.9 pips | 0.2 pips ($2.00) |
Average Trading Cost GBP/USD | 1.7 pips | 1.3 pips | 1.3 pips | 1.4 pip | 0.4 pips ($4.00) |
Average Trading Cost Gold | $0.34 | $0.63 | $0.30 | $0.30 | $0.17 |
Trading Platform(s) | Proprietary platform, Web-based | MetaTrader 4, MetaTrader 5, Proprietary platform, Trading View | MetaTrader 4, Proprietary platform | MetaTrader 4, Proprietary platform | Proprietary platform |
Islamic Account | |||||
Negative Balance Protection | |||||
Get Started Visit Website80% of retail CFD accounts lose money | Visit Website | Visit Website | Visit Website | Visit Website |
Plus500
In Summary multi-asset and CFD brokerPlus500 offers US futures trading in cryptocurrencies, agriculture, metals, Forex, interest rates, energy, and equity indices from its user-friendly, web-based trading platform and mobile app. It includes a sentiment-based indicator and advanced analytical tools. Traders get 24/7 customer support, while the finance department ensures fast and secure withdrawals via bank wires, credit/debit cards, and PayPal.
I rank Plus500 among the best-priced CFTC brokers, with contract fees of $0.89 per standard and e-mini futures contract and $0.49 for micro contracts. A $10.00 liquidation fee per contract also exists. Plus500 has an excellent educational platform for beginner traders, including video lessons.
Pros & Cons
- Broad asset selection in equities and options
- Free and unlimited demo account
- Advanced free-of-charge analytical trading tools
- Global and regulated fintech platform
- Sub-standard trading platform without support for automated or social trading
Forex.com
In Summary Excellent trading conditions + NFA regulationFounded in 2001, Forex.com is a global name owned by StoneX Group, a publicly traded company on the NASDAQ. It is a CFTC Forex broker and is owned by a company facing strong regulatory requirements due to its public listing.
Forex.com executes over 99% of customer trades in less than 1 second, and their average execution speed is 0.05 seconds. They successfully fill 99.99% of client orders.Forex.com provides regular analysis with trade ideas and webinars on key events such as non-farm payroll.
Direct Market Access is available at Forex.com. This can be a great option if you want to access raw spreads from their liquidity providers and do not want a dealing-desk or market maker type of account.
Pros & Cons
- Lower minimum deposit
- Islamic account available
- Good reputation
- Choice of account types
- Withdrawal fee
OANDA
In Summary Solid services + excellent currency converterOanda offers quality education and actionable trading signals for beginners via the Oanda Technical Analysis service. Algorithmic traders can rely on MT4, which Oanda upgrades with 28 plugins for manual traders. Social traders can engage with 50M+ peers by connecting to TradingView. Traders get a balanced choice of Forex pairs, and Oada offers cryptocurrency trading in partnership with Paxos.
The Elite Trader program caters to high-volume traders and lowers trading fees between 10% and 34%. The lowest tier requires a reasonable monthly trading volume of $10,000,000 or approximately 100 standard lots, placing Oanda among the best CFTC-regulated Forex brokers.
Pros & Cons
- Excellent 28-tool MT4 upgrade package and outstanding trading tools
- Trustworthy broker with more than 25 years of experience
- Competitive pricing environment
- Quality market commentary on the OANDA blog MarketPulse
- Asset selection does not include equities
IG Markets
In Summary No withdrawal feeI rank IG Markets among the best CFTC-regulated Forex brokers due to its low trading fees. Forex traders get commission-free spreads from 0.8 pips per 1.0 standard round lot or $8.00. The four-tier volume-based rebate program lowers costs by between 5% and 15%, and the lowest tier requires $50 million in notional trading volume or approximately 500 standard lots. IG Markets also delivers average order execution speeds of 18 milliseconds.
IG Markets offers Forex traders MT4 and its proprietary, award-winning, cutting-edge, web-based alternative. It is fully customizable and includes a quality charting package, IG Live, and actionable trading recommendations.
Pros & Cons
- Broad asset selection for Forex traders
- Quality choice of trading platforms, including MT4
- Autochartist signals integrated with the proprietary web-based platform
- Limited deposit and withdrawal methods
- Higher minimum deposit requirement, but within a reasonable demand
Interactive Brokers
In Summary suits demanding traders and algorithmic strategiesInteractive Brokers ranks among the best CFTC-regulated Forex brokers due to its industry-leading trading infrastructure. It serves 2.56M+ accounts with $2.35M+ daily average revenue trades. Traders can use the cutting-edge in-house developed IBKR Desktop, IBKR Trader Workstation, IBKR Mobile, and IBKR GlobalTrader. With 150 markets from 34 countries, Interactive Brokers offers unmatched asset selection among online brokers, placing it in the Top Two globally.
Forex traders benefit from ultra-low fees, which are as low as 0.08 pips or $0.80 per 1.0 lot for a commission of $2.00 for high-volume traders. Beginners receive high-quality education via the IBKR Campus.
Pros & Cons
- Many Different Features
- Many Educational Services
- Overwhelming Amount of Information
- No Mention of Bonuses or Promotions
What is the CFTC?
The Commodity Futures Trading Commission (CFTC), a US government agency created in 1974, regulates the US derivatives markets. Since the CFTC’s founding, the US government has expanded its mandate to keep up with developments such as the popularity of retail Forex trading and cryptocurrency assets.
The CFTC’s mission is to foster open, competitive, and financially sound markets and protect market users and the public from fraud, manipulation, abusive practices, and systemic risk related to derivatives subject to the Commodity Exchange Act (CEA).
Key takeaways:
- The CFTC is a US government regulatory agency.
- All Forex & derivatives brokers actively offering services to US-resident traders must be registered with the CFTC.
- The CFTC delegates much of its oversight operations to the NFA.
Advantages/Benefits of the CFTC
CFTC and NFA regulations and guidelines set minimum standards for U.S.-active Forex brokers to help minimize the risk of fraud and give traders a transparent and fair marketplace. Some of the key measures and mandates they use to achieve this are:
Segregated accounts. Separating client funds is possibly the most crucial requirement for the safety of client funds by CFTC Forex brokers. The CFTC requires that brokers keep customer funds in accounts separate from the firm’s money. Whether or not you choose a CFTC Forex broker, I highly recommend always using a broker that segregates your deposits from its operations.
Trade integrity. Brokers must have procedures designed to ensure the integrity of trades placed on their trading platforms. In particular:
- Pricing. Trading platforms must be designed to provide pricing that is reasonably related to current market prices and conditions. Customer market or limit orders must be executed at or near the price at which other customers’ orders during the same time have been executed.
- Slippage. Trading platforms should be designed to ensure that any slippage is based on real market conditions.
- Rollovers. Trading platforms should be designed to ensure that automatic rollovers comply with the terms disclosed in the customer agreement.
Market risk disclaimer. All brokers registered with the CFTC must display a disclaimer about trading risks, particularly stating that performance is not guaranteed.
Enforcement. Regulations without enforcement mean very little. The CFTC has dedicated enforcement staff as part of their Division of Enforcement (DOE). Taking 2020 as an example, the DOE filed 113 enforcement actions, the highest number in the CFTC’s history. That same year, the CFTC ordered over $1.3bn in monetary relief.
Whistleblower program. The CFTC is one of the few financial regulators that directly accepts complaints about suspicious activity from the public. The Division of Enforcement houses the CFTC’s whistleblower program, which provides monetary incentives, confidentiality and retaliation protections to individuals who come forward to report possible misconduct. The CFTC even pays a percentage of money sanctioned to whistleblowers whose information leads to successful enforcement. On one occasion in 2021, the CFTC paid a whistleblower almost $200 million.
Key takeaways:
- The CFTC requires brokers to segregate customer accounts from their operations, a critical foundation for the safety of funds.
- The CFTC requires that brokers provide their clients with trade integrity with fair pricing, slippage, and rollovers.
- The CFTC enforcement program leads to successful prosecutions and recovery of assets every year.
Disadvantages/ Prohibitions of the CFTC
U.S. persons using CFTC-regulated Forex brokers have several significant restrictions to consider that they would not face at non-CFTC regulated brokers based outside the U.S. The most important restrictions are:
Leverage. This restriction is probably the most significant for U.S.-based traders. Since 2010, the CFTC has set the maximum leverage for retail Forex traders at 50:1 for major Forex pairs (EURUSD, GBPUSD, USDJPY, USDCAD, USDCHF, AUDUSD, NZDUSD, USDSEK, USDNOK, and USDDKK), and 20:1 for minor Forex pairs.
No Hedging. The CFTC does not permit hedging on Forex accounts, i.e., holding two opposing positions in the same currency pair.
First in First Out (FIFO). This rule requires that traders liquidate their positions in the order in which they were opened in a currency pair. For example, if you opened two positions in EUR/USD, you must close the first one before closing the second one.
Key takeaways:
- Using a CFTC broker means maximum leverage of 50:1 on major Forex pairs and 20:1 on minor Forex pairs. You can’t hedge trades, and FIFO rules apply.
How Does the CFTC Intervene in Cases of Financial Abuse?
The CFTC monitors US futures and options markets via its CFTC Market Surveillance Program in partnership with exchanges. Should the CFTC or an exchange detect suspicious activity, the first step is verbal contact seeking to clarify the situation. Although the CFTC grants an exchange the right to resolve the issue without CFTC intervention, the CFTC has emergency powers to force action but has only ever used this power against an exchange four times. These powers have been used to impose new or reducing existing position limits, position liquidations, delivery period extensions, or market closures.
The CFTC may also impose fines on market participants, impose lawsuits, or revoke licenses, forcing cessation of operation. The most prominent institutional examples include PFG Best and MF Global. A detailed list of all such historic actions is available on the CFTC website under the Enforcement Actions section.
The Bottom Line
- CFTC oversight of brokers. Any Forex or Futures broker offering services to U.S.-based traders must be registered with the CFTC and regulated under its standards.
- US-based traders. CFTC regulations are not designed to regulate traders, meaning if you correctly report offshore accounts to the IRS, you can use offshore brokers which are not regulated by the CFTC. If you are a US-based Forex or Futures trader, you should consider using a CFTC regulated broker as it offers major protections.
- The CFTC’s role. The CFTC and NFA are active in setting industry standards and preventing fraud. CFTC regulated brokers are well-capitalized, have strong safeguards to protect your deposits, and provide a fair environment for trading.
- Restrictions. U.S.-based traders face leverage restrictions, no hedging and FIFO rules.
- Checking regulatory status. It’s easy to check the regulatory status of a broker that claims to be regulated in the US through the NFA’s “BASIC” portal. While registration and a clean disciplinary record won’t protect you from fraud, most scams involve unregistered entities.
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