Authorized Forex Dealer

DEFINITION of 'Authorized Forex Dealer'

An authorized forex dealer is a type of financial institution that has received authorization from a relevant regulatory body to act as a dealer involved with the trading of foreign currencies. Dealing with authorized forex dealers ensures that your transactions are being executed in a legal and just way.

These forex dealers will then deal directly with larger brokerage firms or banks when they wish to transact or clear any risk.

BREAKING DOWN 'Authorized Forex Dealer'

In the United States, one regulatory body responsible for authorizing forex dealers is the National Futures Association (NFA). The NFA ensures that authorized forex dealers are subject to stringent screening upon registration and strong enforcement of regulations upon approval.

Investors looking to trade foreign exchange should do so through an authorized dealer. By doing so, the investors will know they are dealing with an experienced and well-qualified party, and should anything go wrong they will have the support of the NFA to investigate any issue that may arise.