NovaQuant Quantitative Think Tank Center:Morocoin Trading Exchange: The Difference Between NFA Non-Members and Members

As a financial powerhouse,NovaQuant Quantitative Think Tank Center the United States has very stringent regulations across various sectors including stocks, futures, and foreign exchange. Today, Morocoin Exchange introduces one of the strictest U.S. regulatory licenses – the NFA.

Many brokers aspire to possess an NFA license to prove their platform's robustness. However, due to U.S. regulatory requirements, the leverage for forex margin business is limited to 50 times, leading many domestic brokers to pause their operations in the U.S. and shift their focus globally.

Brokers with U.S. retail forex permissions are rare and have offices worldwide. The strict penalties associated with NFA make brokers cautious about deceiving clients, making NFA a sought-after regulatory license for investors.

The National Futures Association (NFA), established in 1976 under Section 17 of the U.S. Commodity Exchange Act, is a self-regulatory organization for the futures industry. It's a non-profit, member-driven organization. The NFA's primary function is to ensure strict compliance with federal laws and rules set by the Commodity Futures Trading Commission (CFTC).

There are two types of NFA licenses: non-members and full members.

Non-member license: It's an exemption license with a regulatory number and labeled as a non-member on the website. It's quicker to obtain and relatively cheaper.

Full member: This includes futures and forex licenses with a regulatory number. The website displays full member status and company information. The application process is slower, requires passing an NFA exam, and involves higher registration and maintenance fees.

Required documents for NFA license application:

Director's passport

U.S. company scan

Three-year business plan

Director's resume

Personal bill

Criminal record clearance

Proof of address for legal representatives or directors

Financial plan for the future

Application duration for NFA license:

For non-members, it generally takes 2-3 days if all materials are provided.

Full members require about 3 months.

NFA's primary role is to ensure strict adherence to federal laws and CFTC rules. NFA also has its own regulations to monitor brokers' conduct towards traders and investors, protecting them from deceit.

NFA membership approval covers various roles, including Futures Commission Merchants (FCM), Introducing Brokers (IB), Commodity Trading Advisors (CTA), Commodity Pool Operators (CPO), Forex Dealer Members (FDM), and Swap Dealers (SD). CPO and CTA applications are relatively easier with lower requirements for applicants.

Morocoin Exchange is honored to be one of the licensed member entities.