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NFA Prohibits US Forex Brokers From Accepting Credit Cards

Jun 24 2014
By
Forexbrokerz.com
Just a couple of days after it became clear that traders' deposits with US Forex brokers have hit a record low, the US retail forex industry is about to take another blow. If NFA ban on credit card deposits get CFTC approval, brokers will likely hit another hurdle attracting new clients. 
 
Chicago — National Futures Association (NFA) announced that its Board approved a ban on the use of credit cards to fund retail forex and futures accounts. This prohibition is subject to approval by the Commodity Futures Trading Commission. Although NFA’s proposed rule prohibits the use of credit cards to fund both futures and retail forex accounts, NFA determined through its study that futures commission merchants currently don’t permit this practice (except currently for forex).
 
President & CEO National Futures Association
Dan Roth – President & CEO National Futures Association
 
“Since our inception, NFA has been committed to protecting investors,” says NFA President and CEO Dan Roth. “Forex and futures markets are both high-risk and volatile, and individuals who wish to participate should use only risk capital to fund their accounts. Allowing customers to fund accounts with credit cards encourages them to trade with borrowed money.”
 
This prohibition is a direct result of an extensive study by NFA of forex dealer members’ business practices. NFA looked at more than 15,000 retail forex accounts and noted that an overwhelming amount of these accounts were funded by small retail customers using a credit card or borrowed funds, and a majority of these accounts were unprofitable.
 
“Over the last decade, NFA has made significant strides in its regulation of the retail forex markets,” Roth says. “From the increase in capital requirements to mandating content requirements so that all customers could receive comprehensive and accurate account information, this proposal is just another very important step to fulfill our mission to protect customers.”
 
This is a huge consumer protection move which protects against stolen identities, stops people with gambling tendencies to get into financial trouble by using borrowed funds that they most likely will lose assuming they blow their account. Regulation is very rock solid in the USA, no one can deny that. However, there could still be some amending to regulations to make it a little more business friendly such as treating IBs in FX as agents of the brokers with whom they introduce for and lowering the capital requirement to maintain IB status or to operate a white label; allowing for funds still be held by the principal broker, and require a custom license for pure FX trading/investing IBs to make it easier for the industry to thrive in the retail segment. A model similar to the way independent stock brokers solicit clients to the larger broker/dealers within the equities market could also work in FX for the USA.
 
TAGS: Nfa  nfa prohibition  credit card  credit card forex deposits  credit card forex 
Broker Country Regulation Platform Min Deposit Review
US CFTC, NFA MT4, Web,
in-house
$50 Review Website
US NFA, CFTC MT4 $250 Review Website
Cyprus, UK, Mauritius CySec, FCA, FSC MT4, MT5, Web $10 Review Website
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Belize IFSC MT4, MT5 $100 Review Website
Cyprus, UK, South Africa, UAE CySec, FCA, FSCA, DFSA MT4, MT5, Web $5 Review Website
Cyprus, UK CySEC, FCA MT4, MT5 $1 Review Website
UK FCA MT5 $5 Review Website
UK FCA MT4, Web, MT4
for Mac
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Australia, UK ASIC, FCA MT4, MT5,
cTrader
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UK, Cyprus, Dubai FCA, CySEC, DFSA MT4, MT5, Web,
PrimeTrader
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