RFED stands for Retail Foreign Exchange Dealer. An RFED basically helps in acquiring and exchanges of financial instruments that do not include exchanges like off-exchange and over-the-counter (OTC) foreign currency transactions.

If you want to learn what does RFED means, then you are in the perfect place as this article will discuss all of the important aspects of RFED.

Before jumping into further details, let’s get familiar with what is OTC and off-exchange.

What does RFED Mean

Over the Counter

Over-the-counter (OTC) securities are interchanged directly between trading partners without being listed on the stock exchange. OTC Securities can be mediated by dealers or brokers that are mastered in the OTC market. OTC trading helps to promote stocks and financial instruments that are not available to investors. Companies that are holding OTC shares can raise funds by selling the shares.


Off-exchange refers to a group of insurance products. OTC products are ACA compliant single market plans and are only sold over-the-counter and are not available to customers who are eligible for tax credits. It should be bought from a broker or directly from a freight carrier. “Off-exchange” stands for “what” and not “where.” Most of the products sold on the exchange are also available outside the exchange.

As a result, unsubsidized customers can purchase most exchange plans from freight carriers or brokers without visiting the website. There are a few product groups, including Cost Sharing Reduction (CSR) plans and several other products that are only available on the stock exchange. OTC customers are not subsidized.

However, family members and other third parties can purchase over-the-counter products for individuals who may be eligible for grants or Medicaid. Other OTC clients may be eligible but are unaware that they have subsidies.

OTC and one-sided products are part of the same risk pool, but there are some important differences. Selling over-the-counter products does not generate commission payments on most state exchanges. Moreover, it has more options in terms of fees.

What does Retail Foreign Exchange Dealer do?

They are specialized in handling forex transactions, future contracts, and other contracts for people who are not qualified for operating the transaction elsewhere.This transaction can be funded through leverage, margining, or other means. Financing can be from counterparties, providers, or third parties working for these individuals. This type of transaction is usually an over-the-counter, over-the-counter cash transaction.

Futures Contracts

It is a legally binding agreement to buy or sell a standardized asset on a specific date or during a specific month. This transaction is facilitated through a futures exchange. Futures contracts are standardized and ensure the quantity and quality of a product for all participants and exchange-traded.

It eliminates the counterparty risk and makes these instruments indispensable to commodity producers, consumers, traders, and investors. This contract specifies the quality, quantity, physical delivery time, and location of the given product.

Foreign Currencies

Forex Transaction

Theforeign exchange or forex market is the world’s largest financial market, and it plays a vital role in the global economy. Forex participants include government, businesses, and investors. The government uses the forex market to implement policies.

When you are trading forex, then you are not only trading one product but two currencies against each other. In technical terms, it is known as currency pair.

There are two types of the forex exchange market; spot market and forward market.

Spot market: It is a type of market in which receipts and payments are made very immediately. The nature of the rate of transactions is current. 

Forward market refers to risk management. Transactions are made when the risk is very low, and transactions are mostly held at a future date.

Role of the Commodity Futures Trading Commission (CFTC) 

It is important to discuss the role of CFTC to learn what does RFED means. The Commodity Futures Trading Commission (CFTC) is an independent federal agency that regulates the US futures, options, and swap derivatives markets.

Its goals include promoting competitive and effective markets, analyzing abusive trading practices, and protecting investors from fraud.

CFTC doesn’t examine the retail foreign exchange dealers, but they do set some restrictions on who can handle the transactions. To legally do business with the public, the dealers have to become official members of The National Futures Association (NFA). 

National Futures Association (NFA) is an organization that examines the US market of futures and derivatives.

OTC Trades

OTC transactions are conducted directly between the person and authorized Forex dealers. The clearinghouse is generally not included in this legal process. These over-the-counter transactions are held online through electronic media or telephone. Forex retailers act as market makers between individuals and charge for services.

Role of CFTC

Authorized forex Dealers

There were many dealers who were working illegally and without authorization in the past. They hijacked various clients’ data and money. Nowadays, everyone is aware that having an authorized forex dealer can save them from trouble. In the USA, NFA authorizes the dealer after proper assessment and training if necessary. Licensed Forex traders in the United States must undergo rigorous verification at the time of registration and, if approved, rigorously enforce regulations.

Regulation of Retail Foreign Exchange Dealers

NFA has made some strict rules, and people or businesses working with them have to follow those rules to stay intact. NFA regulates and looks after foreign exchange transactions. 

RFED is bound to have one principal who is a Forex Associate. A Forex Associate is a person who supervises an order, customer, or a person who solicits funds for a customer or who is involved in such work. The associate has to submit all the documents and follow the rules made by the NFA rules.

If you want to become a member, then firstly, you have to register yourself with the site and then fill the application form. You need to read all the requirements carefully. You have to submit your membership fee after the completion of your application. Other requirements include fingerprint identification and passing the test made by the NFA.

If you still have any questions about RFED or any other queries, you can contact us at any time.

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