Commodity Futures Trading Commission (CFTC) Brokers 2023
The Commodity Futures Trading Commission (CFTC) is an independent governmental agency charged with the regulatory oversight of the futures and options markets in the US, including authorizing brokers and trading platforms. In this guide, we evaluate the top-rated brokers regulated by the CFTC, alongside uncovering the agency’s history, powers and how its rules protect online traders.
Best CFTC Brokers
The CFTC enforces measures to protect futures and options traders in the US. These are the top 5 brokers that hold a license with the CFTC:
#1 - Forex.com
Forex.com boasts a global reputation with multiple awards and 20+ years experience. Regulated in the US, EU, UK and Canada they provide a huge range of markets, not just forex, and offer competitive fees on a cutting-edge platform. The brand also provides a suite of additional tools, from performance analytics and SMART Signals to advanced charts and strategy builders.
"Forex.com is an excellent broker for forex traders with over 80 currency pairs, tight spreads, low commissions and powerful platforms. The brand is also heavily regulated while its parent company is listed on the NASDAQ, giving it a high trust score."
- DayTrading Review Team
- Instruments: Forex, Spot Metals
- Regulator: NFA, CFTC
- Platforms: MT4, MT5, TradingView, eSignal, AutoChartist, TradingCentral
- Min. Deposit: $100
- Min. Trade: 0.01 Lots
- Leverage: 1:50
Forex Trading
Forex.com is a leading FX broker. The brand offers a wide range of currency pairs and some of the lowest fees in the industry. Spreads on the EUR/USD come in as low as 0.0 with a $7 commission per $100k.
Stocks Trading
Forex.com offers access to thousands of US, EU and UK stocks, with spreads of just 1 point. Speculate on household names as well as new IPOs. US stocks are available from just 1.8 cents per share.
Pros
- Beginner-friendly web platform and mobile app
- Fast execution speed of less than 1 second
- Top-rated forex and CFD broker
Cons
- Investment offering varies between countries
- No copy trading platform
- $15 monthly inactivity fee
#2 - NinjaTrader
NinjaTrader is a US-headquartered and regulated brokerage that specializes in futures trading. There are three pricing plans to suit different needs and budgets, as well as ultra-low margins on popular contracts. The brand's award-winning charting software and trading platform also offers a high-degree of customization and superb technical analysis features.
"We recommend NinjaTrader for high-volume futures traders looking for low fees and premium analysis tools."
- DayTrading Review Team
- Instruments: Forex, Stocks, Options, Commodities, Futures, Crypto
- Regulator: NFA, CFTC
- Platforms: eSignal
- Min. Deposit: $50
- Min. Trade: 0.01 Lots
- Leverage: 1:50
Forex Trading
NinjaTrader supports the trading of popular currencies including the EUR/USD. The trading software also offers unique features tailored to forex trading, including specific order and market windows.
Stocks Trading
Stocks can be traded by connecting the NinjaTrader platform to supporting brokers. You can then take positions on large public companies and household names via advanced trading software.
Crypto Trading
Trade micro Bitcoin futures with low fees and leading charting tools. Get exposure to Bitcoin through CME Group's centralized exchange with robust risk management tools.
Pros
- Thousands of add-ons and applications from developers in 150+ countries
- Widely respected and heavily authorized by the NFA and CFTC
- Low fees with $50 day trading margins & commissions from $.09 per micro contract
Cons
- Withdrawal fee on some funding methods
- Non forex and futures trading requires signing up with partner brokers
- Premium platform tools come with an extra charge
#3 - OANDA US
OANDA is a popular brand offering exceptional execution, low deposit requirements and advanced charting and trading platform features. The top-rated brand has over 25 years of experience and is regulated by trusted agencies, including the NFA/CFTC. Around the clock support is available, alongside flexible contract sizes and automated trade executions.
"We recommend OANDA for US traders seeking a user-friendly platform with premium market research and a straightforward joining process. OANDA is a particularly good pick if you want a heavily regulated broker with a secure trading environment."
- DayTrading Review Team
- Instruments: Forex, Crypto
- Regulator: NFA, CFTC
- Platforms: MT4, TradingView, AutoChartist
- Min. Deposit: $0
- Min. Trade: 0.01 Lots
- Leverage: 1:50
Forex Trading
OANDA offers 68 forex pairs, more than many alternatives. The broker's in-house platform also offers impressive execution speeds and a suite of advanced charting and analysis tools.
Crypto Trading
Speculate on the world's biggest cryptos by market cap. Commissions are lower than many peers starting at 0.25%. Clients can spot trade cryptocurrencies on Paxos's itBit exchange through the OANDA platform via OANDA’s partnership with Paxos. Users can trade digital currencies in a few taps through the iOS and Android mobile app.
Pros
- Transparent pricing structure with no hidden charges
- API facilitates access to 25 years of historical data and rates from 200+ currencies
- Low minimum deposit for beginners
Cons
- Customer support not available on the weekend
#4 - IG Group
IG is an award-winning broker that has an excellent reputation globally. The brand-US offers spread betting, CFD and forex trading across a comprehensive suite of markets. IG is also multi-regulated, provides a great trading app and has 50 years experience.
"IG offers a superb all-round package. Beginners will appreciate the user-friendly web platform and secure trading environment while established investors will rate the 17,000+ markets and top-tier market research."
- DayTrading Review Team
- Instruments: CFDs, Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto, Spread Betting
- Regulator: FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA
- Platforms: MT4, AutoChartist, TradingCentral
- Min. Deposit: $0
- Min. Trade: 0.01 Lots
- Leverage: 1:30 (Retail), 1:250 (Pro)
CFD Trading
IG offers an impressive suite of 17,000+ CFD instruments. Negative balance protection ensures accounts cannot drop below zero while custom price alerts and the IG Academy enhance the trading experience.
Forex Trading
IG offers currency trading on its award-winning web platform and mobile app. Comprehensive charts and forex analysis tools are also available through ProRealTime.
Stocks Trading
IG offers 13,000+ shares, with more listed firms than most competitors. Fees are low with no commission on US stocks. Extended hours trading is also available alongside ultra-fast execution speeds of 0.014 seconds.
Crypto Trading
11 popular cryptos are available, plus two crypto crosses. A crypto index is also offered, following the value of the top 10 digital currencies by market cap. All cryptos are available via CFDs.
Pros
- Opening an account takes less than 5 minutes
- Users have access to a comprehensive range of charts, market news, client sentiment data, and analysis tools
- IG offers great educational materials including an extensive library of training and support on how to day trade successfully
Cons
- Inactivity charge
- No copy trading platform
#5 - Nadex
Nadex is a renowned exchange and binary options provider, based in the US. The company is fully regulated by the CFTC and offers options, call spreads and Knock Out contracts. Nadex also has just a $1 entry or exit fee and a user-friendly platform and proprietary app.
"Users looking to trade short-term binary options with a US-regulated broker will find a good platform in Nadex."
- DayTrading Review Team
- Instruments: Binary Options, Knock Outs™, Call Spreads
- Regulator: CFTC
- Platforms: Own
- Min. Deposit: $250
- Min. Trade: $1
Forex Trading
Speculate on 11 popular currency pairs via Knock Out contracts, call spreads and binary options. Nadex offers a wider range of timeframes than most binary options brokers, with contracts spanning from intraday to weekly.
Stocks Trading
Speculate on a handful of global indices via binary options contracts, including the S&P 500 and FTSE 100. There are low commissions and traders can see fixed payouts and risk levels before opening a trade.
Crypto Trading
Nadex offers a limited list of cryptos with just Bitcoin and Ethereum. Traders can go long or short though with straightforward binary options contracts that mean you don't need to own the underlying token.
Pros
- Proprietary mobile app with good range of indicators and charting tools
- A range of timeframes that will suit both short and longer term strategies
- US regulated exchange with excellent trust score
Cons
- Products and tools are more advanced than some alternatives
- Narrow selection of cryptocurrencies to trade
- No welcome bonuses or financial incentives
What is the CFTC?
Firstly, what’s the meaning of the CFTC acronym? It simply stands for the Commodity Futures Trading Commission. It was born from the Commodity Futures Trading Commission Act of 1974.
Its jurisdiction extends to numerous functions, from investigations into market manipulation cases to broker licenses and reporting requirements.
Purpose
The objective of the CFTC is to facilitate transparent, competitive and effective financial markets. They also seek to protect US persons and consumers. That means introducing variation margin rules, trade reporting guidelines and other regulations to prevent abusive practices related to derivatives and other products subject to the Commodity Exchange Act (CEA).
In fulfilling their mission to promote safe markets, the regulatory agency also trawls through historical data and searches for potential risks. That means new technologies, such as blockchain and products, such as binary options, may all trigger CFTC investigations.
History
Trading futures contracts for agricultural commodities has been around since the late 19th century. Approved futures have been regulated since the 1920s. It was the Grain Futures Act of 1922 that built the basic authority. However, that changed with the Commodity Exchange Act of 1936 (7 U.S.C. 1 et seq.). The agency can enforce regulations that feature in title 17 of the Code of Federal Regulations.
Note you can head to the US GPO Access website for CFTC regulations found at Title 17 Chapter I of the Code of Federal Regulations (CFR).
Since the 1970s, futures trading has expanded well beyond traditional commodities, such as oil, gold, natural gas, and corn. Now there is futures trading in forex, foreign government securities and stock indices. Not to mention, in more recent years, there has been a surge in the international trade of digital currency.
To meet growing demands, new orders and regulations had to be brought in. Therefore, in 1974, Congress commissioned the CFTC, granting the agency a mandate to regulate. The Commodity Futures Trading Commission Act of 1974 actually meant the CFTC replaced the U.S. Department of Agriculture’s Commodity Exchange Authority.
The number of employees has also grown over the years. While headquarters remain at their Washington DC address, regional offices have sprung up in locations all over the United States, including:
- Chicago
- New York
- Kansas City
December 2000 was an important month in the agency’s history. Congress passed the Commodity Futures Modernization Act of 2000. As a result, the SEC and CFTC were to build a joint regulatory framework to oversee single-stock futures.
Swaps Regulations
By 2003, the value of swaps had grown exponentially. Then following the 2007-2008 financial crisis, the multi-trillion dollar swaps entity question had to be addressed. To do that, an array of swap dealer rules, definitions and weekly reports were brought in.
It was actually 2010 that the Dodd-Frank Act increased the agency’s mandate to include jurisdiction over swaps. The aim of this move was to prevent manipulative schemes while not having to prove the intent of the accused to move prices and demonstrate artificial prices.
The director of enforcement, among others, are still working hard to monitor the list of registered swap dealers and bring transparency to the swaps market, including substituted compliance.
Currently, the CEA requires counterparties to execute specific swaps on a registered swap execution facility (SEF). Alternatively, you transactions must take place on a designated contract market (DCM) or a SEF exempt from registration.
Recent History
In recent years, the CFTC has also done more in terms of forex regulations. Regulated forex brokers now have bigger hurdles to clear. And despite registration guidance, filings for breaching forex regulations are high. However, numerous broker checks help to keep firms and exchanges in check. The benefit of which is an increase in consumer protection and transparent markets.
The CFTC chairman Christopher Giancarlo expressed a focus on similar areas in his 2018 priorities, including swaps, algorithmic trading and position reporting. This stems from the Project KISS (keep it simple stupid).
Structure
Head to the official website and you will see the CFTC structure is relatively straightforward. The agency has five committees with commissioners heading up each one. Nominees are put forward by the President and then approved by the Senate.
The committees concentrate on:
- Technology
- Agriculture
- Global markets
- Energy & environmental markets
- Coordination between the CFTC and SEC
Each committee is made up of individuals from respective industries, including traders, futures and commodities exchanges, as well as consumers.
There are also several important divisions, including those of
- Clearing and Risk
- Market Oversight
- Enforcement
Within those divisions are several key offices, including those of the:
- International Affairs
- Executive Director
- Chief Economist
- General Counsel
- Whistleblower
Funding
The CFTC is the only one of the four primary regulators to not be self-funding. So when you take the CFTC vs the SEC, the latter functions from user fees and fines levied on the industry. Yet despite a request for a transaction fee from the CFTC, Congress is yet to take action.
This meant during the government shutdown in October 2013, “futures and most swaps markets were left with essentially no cop on the beat”.
The CFTC budget usually changes each fiscal year. It was $98 million US dollars in 2007, which then increased by 80% to $205 million the following year. 2012 then saw a cut to $180.4 million. Unsurprisingly, budget requests are often rejected leading to frustration. In fact, the leadership has previously described budgets as “woefully insufficient”.
While hundreds of millions of dollars may sound like a lot, that has to pay for upwards of 400 full-time employees, training, events, attorneys, hearings and more. Note the UK’s FCA had a 2016/17 budget of around $750 million. Although it is worth bearing in mind the FCA is the single largest regulatory agency in the UK, while the CFTC is one of several big regulators.
Powers & Responsibilities
The CFTC is responsible for promoting market functionality and consumer protection. Fortunately, the head and director of enforcement, the office of the Inspector General and the joint audit committee, among others, all have considerable legislative powers.
However, the CFTC does not directly regulate individual firms, apart from newly registered swap dealers and participants. Instead, their oversight allows markets to work at price discovery and offsetting price risk.
Although the CFTC has limited jurisdiction in foreign countries, the agency works with outside bodies, such as the UK’s FCA. This helps them to draw up their Red List. A list which details unregistered foreign entities that appear to warrant regulation.
They also have a long list of other powers and regulations, including:
- Trade execution requirements
- Transaction-level requirements
- Know your customer standards
- Registration requirements
- Auditing requirements
- Large trader reporting
- Testimony regulations
- Valuation reporting
- Position limits
In addition, the agency enforces a long list of rules, including those on
- Embargos
- Wash Trades
- OCR final rules
- Whistleblowers
- 60-second rules
- Net capital regulations
- External business conduct rules
- Initial segregation and uncleared swap margin rules
On top of that, the CFTC can hand out warnings and no action letters, plus fines, suspensions and permanent bans. All of their powers they aim to use as system safeguards to keep US persons and markets secure.
The CFTC also oversees the National Futures Association (NFA). Registration is straightforward and you can conduct a free entity search to check the background of derivatives industry professionals.
The agency can also grant a non-financial entity exemption. However, exemption filing requires meeting rigorous requirements. Details of which can be found on the official website.
Criticisms & Challenges
The CFTC continues to face criticism and challenges. For example, the regulator’s auditor KPMG withdrew almost an entire decade of financial opinions following material errors in the agency’s books and records.
Cryptocurrency
One of the greatest challenges the CFTC faces is regulation of the cryptocurrency ‘commodity’. Should digital currencies be classed as commodities falling under CTFC jurisdiction or are they securities for the SEC to regulate?
The agency has held numerous talks, meetings and hearings on cryptocurrency in early 2018. However, this is an issue that actually stretches back many years. In fact, the government and CFTC have been debating jurisdiction over the Bitcoin commodity since March of 2014.
Following hearings on Bitcoin and futures reports, the agency sought regulations to treat Bitcoin transactions as swaps, futures or spot transactions. If not, Bitcoin would probably be a commodity under the CEA. But the CFTC now approves Bitcoin futures as commodities, following court rulings in 2015 and early 2018.
The opinion of Mark Wetjen, following a Bitcoin meeting among CFTC’s Global Markets Advisory Committee, was that “[Bitcoin] could play a fascinating role in the derivatives markets as well as financial services”.
Action
But despite Giancarlo being vocal on cryptocurrency and a whole string of press releases, live video streams and announcements, what has the CTFC actually done to tackle the question of digital currencies?
A CFTC primer on virtual currencies was released in 2017. The report, which expressed concerns over Bitcoin enforcement and future regulations, led to an 8% drop of Bitcoin in just one day.
Approval has also been given for the creation of two subcommittees of the Technology Advisory Committee. One will be concerned with virtual currency as a commodity, including enforcement and the actual delivery of the likes of Bitcoin. The other committee will address the more general application of distributed ledgers and fintech in the financial space.
Both Tether and Bitfinex received subpoenas from the CFTC in early 2018, demonstrating their intention to regulate.
Finally, it’s worth noting the CFTC is not the only regulator with crypto concerns. The SEC sees cryptocurrency as securities. As a result, a virtual currency task force, known as the ‘Cyber Unit’ sprung to life in 2017 to tackle fraudulent ICOs.
Note automated trading and cybersecurity are two other main issues on the CFTC agenda.
Recent Performance
The agency has been busy in recent years. In November of 2014, the CFTC and the UK’s FCA took action against six banks for manipulating forex markets:
- JPMorgan
- Citigroup
- Chase
- HSBC
- RBS
- UBS
Between them, the banks gave $1.2 billion USD to the FCA and $1.5 billion USD to the CFTC.
In between a flurry of enforcement actions in 2016, they expanded the mandatory clearing requirements for interest rate swaps.
2017 saw the CFTC vs Monex, the FX group, following the defrauding of thousands of retail customers out of hundreds of millions of dollars. In fact, by the end of 2017, the agency had taken 49 enforcement actions and given out $413 million in fines and penalties.
At the beginning of 2018, the agency filed eight anti-spoofing enforcement actions against Deutsche Bank, HSBC and UBS, leading to tens of millions of dollars worth of fines.
In the same year, the CFTC was in the news as Trumps’s White House sought to levy fees on derivatives users to enhance the agency’s 2019 budget. However, industry opposition looks to eliminate any initial open interest to the plan.
Advantage Futures LLC also faced a $1.5 million fine in early 2018. However, annual reports show a host of hedge funds and other companies incur substantial sanctions each year.
CFTC Contact
It is straightforward to get in contact with the CFTC. In fact, head to their official website for the relevant phone number. You can then have questions answered around holiday schedules, insider trading rules and other regulations.
Alternatively, the website portal itself publishes information. For example, you can find weekly futures reports and data, plus a glossary of important terms.
The agency is also moving with the times, as you can download podcasts, including key speeches. This can be a great way to find out about everything from Japanese Yen net positions to interpretive cross-border guidance.
You can also use their SmartCheck tool to protect yourself from fraudulent websites.
Note it is if the Office of the Chief Economist that produces white-papers encompassing a wide range of CFTC topics.
Final Thoughts on the CFTC
The CFTC is a reputable agency, delivering on its mandate to regulate the futures and options markets. In recent years the body is positioning itself as the predominant regulator of virtual currencies. However, their jurisdiction, particularly with regard to spot markets, remains limited. Having said that, licensed members will have to adhere to CFTC’s core principles and rigorous regulations.
So before you sign up to a new broker and login into your new trading account, conduct a member registration search first. Simply head over to their official website and plug in the requested details.