Forex retail foreign exchange brokers

Retail traders (individuals) are an explosively growing part of this market, both in size and importance. Currently, they participate indirectly through brokers or banks. Retail brokers, while largely controlled and regulated in the USA by the CFTC and NFA have in the past been subjected to periodic foreign exchange scams. To deal with the issue, the NFA and CFTC began (as of 2009) imposing stricter requirements, particularly in relation to the amount of Net Capitalization required of its members. As a result many of the smaller, and perhaps questionable brokers are now gone.

There are two main types of retail FX brokers offering the opportunity for speculative currency trading: Retail brokers who employ the "Agency Broker" model and Market-Makers who employ the "Broker as principal or specialist" model. "Agency Brokers" serve as 'your representative' in the broader FX market, by seeking the best prices for your orders, and then typically pass your orders through to some other market-maker, bank or dealer, after applying a small mark-up. Market-Makers, by contrast, typically play the role of 'final resting stop' for your orders by choosing to simply fill them immediately and then manage the resulting risk themselves. No one model is better than the other, and both have various benefits, advantages and drawbacks.

Nonetheless, it is not widely understood that some retail brokers (market makers) typically trade 'against' their clients (via the broker as "principal" model rather than the "agency" broker model) and frequently take the other side of their customers' trades. This may sometimes create a potential conflict of interest and give rise to some of the unpleasant trade-execution experiences some traders & customers have had. A move toward NDD (No Dealing Desk) and STP (Straight Through Processing) has helped to resolve some of these concerns and restore trader confidence, but cautious optimism is still advised.

The earliest Retail FX brokers were CMC Markets, SAXO Bank (Formerly MIDAS), FXCM (formerly Shalish Capital Markets) GFT (Global Forex Trading) MG Forex (AKA "Money Garden"), eForex.com, and Matchbook FX, which was notable because it was the 1st and only FX broker that pursued a user-price driven ECN model, rather than a Dealer/Market Maker model.