Formed in 1982.
Membership is mandatory for any futures or forex brokers operating in the US.
Appointed to safeguard market integrity and protect investors by implementing regulations.
Provides mediation and arbitration for resolving consumer complaints.
On-exchange traded futures
Retail off-exchange foreign currency
OTC derivatives (swaps)
Membership of 3,900 firms and 54,000 associates
Commodity Futures Trading Committee (CFTC)
Formed in 1974.
Independent agency with the mandate to regulate US commodity futures and options markets.
Assures economic futility of futures markets by encouraging competitiveness and efficiency.
Protects against fraud, manipulation, and abusive trading practices.
Ensures financial integrity of the clearing process.
Clearing and Risk (DCR)
Market Oversight (DMO)
Swap Dealer and Intermediary Oversight (DSIO)
The CFTC consists of 521 staff headed by Chairman Gary Gensler
Financial Conduct Authority (FCA)
Formed in 2013.
Independent body without government funding, though accountable to the treasury.
Entirely funded by the financial firms they regulate.
Promoting healthy competition in UK markets
Attempting to instill market confidence
Ensuring financial stability in forex markets
Protecting consumers from market corruption
Policing financial crime where appropriate
The FCA Supervises the conduct of 26,000 financial firms
Financial Futures Association of Japan (FFAJ)
Formed in 1989.
Self-regulatory body in accordance with the Financial Futures Trading Law of 1992.
Objective is to ensure the protection of investors and the sound growth of the futures industry.
Formulating self regulatory rules
Providing members with audit, guidance and recommendations
Promptly resolving investor complaints in cooperation with members
Conducting research on both domestic and foreign financial futures markets
Issuing publications on futures and hosting seminars and training
The FFAJ has a total membership of 164 organisations
State Administration of Foreign Exchange (SAFE)
Formed in 1978.
Administrative agency tasked with drafting rules and regulations governing forex market activity.
Charged with managing China's foreign exchange reserves.
Participating in drafting relevant laws, regulations and departmental rules on forex administration
Studying and proposing policy suggestions for the improvement of best forex market practices
Monitoring relevant statistics and releasing relevant information where appropriate
Supervising and managing the forex market of the state
Supervising the autheticity and legality of forex practices
Implementing supervision and punishing, where necessary, parties in conflict with regulations
Partaking in relevant international financial activities
Undertaking matters assigned by the State Council and the People's Bank of China
China's currency reserves stood at $3.31trn as of December 2012
Asian Financial Crisis
While currency speculators raked in the profits, millions of people in the affected nations suffered huge wealth erosion and long periods of unemployment.
Causes of the crisis in Thailand:
Unsustainable current account deficits
Over-dependence on short-term foreign funds
Poor regulations of the Thai economy
Over-inflated asset prices
Macroeconomic policy, ie. fixed exchange rates
Changed sentiment amongst investors in Thailand
Speculation by participants in the Thai currency markets
Spillover effects in internal Thai markets
The Libor scandal
The London Interbank Offered Rate is used to set a range of financial transactions worth an estimated $300trn.
The scandal saw a number of financial institutions manipulating the rate at which banks lend to each other in order to profit from trading.
"This dwarfs by orders of magnitude any financial scam in the history of markets."
Andrew Lo, MIT Professor of Finance.
"We will never know the amounts of money involved, but it has to be the biggest financial fraud of all time"
Adrien Blundell-Wignall, special advisor to the secretary-general of the Organisation for Economic Cooperation and Development in Paris.
BNM's failed attempts to defend the pound against devaluation as well as billions of dollars in daily forex speculation resulted in monumental losses and a bailout from the Malaysian Finance Ministry in 1994. The Malaysian bank is thought to have lost RM30bn as a direct result of misplaced forex speculation.
"Negara operated behind a thick veil of secrecy. The bank seldom spoke publically about its controversial trading activities. Yet it was increasingly clear to foreign exchange traders that Bank Negara's operations in the foreign exchange markets went far beyond simple self-defence. It became the most awesome currency trader in the world." Gregory Millman, The Vandal's Crown.
Retired Negara deputy manager, Dr Rosli Yaakop estimates the bank's exposure to be between $27bn and $33bn - five times more than its foreign reserves.
Nick Leeson, head of operations at Singapore's Barings Bank, experienced heavy losses as a result of misplaced forex speculation. Leeson's losses leading up to 1995 remained unseen due to a management flaw, as he continued to gamble greater sums in an effort to offset any losses. The trade that undid Leeson was one predicting that the Nikkei would remain stable overnight, however the Kobe earthquake caused a sharp drop in the Nikkei and Asian markets. Leeson lost Barings over $1bn, more than twice its available capital, and served three and a half years in prison.
"It was the most embarassing period of my life and the only person who did anything criminal was me." Nick Leeson.
"We were all driven to make profits, profits, and more profits… I was the rising star." Nick Leeson.