What Is the Foreign Exchange Dealers Coalition (FXDC)?

The term Foreign Exchange Dealers Coalition (FXDC) refers to an alliance composed of the largest U.S. foreign exchange dealers. This group, made up of nine major foreign exchange (forex) dealers, was formed in 2007. The goal of the Foreign Exchange Dealers Coalition was to create awareness and recognition of forex dealers and their views regarding regulation implementation in the industry. Foreign exchange dealers taking part in the coalition attempted to use their collective power to influence the industry.

Key Takeaways

  • The Foreign Exchange Dealers Coalition is an alliance composed of the largest U.S. foreign exchange dealers.
  • The coalition was founded in 2007.
  • The goal of the FXDC was to create awareness and recognition of forex dealers and their views regarding regulation implementation in the industry.


Understanding the Foreign Exchange Dealers Coalition (FXDC)

The FXDC became involved with proposals addressing major regulatory changes in the forex industry, notably regulatory changes put forth by the Commodity Futures Trading Commission (CFTC). It aimed to do this by protecting the interests of investors while ensuring there was no disruption to business activities.

The commission announced changes in regulation following the passing of two key laws that were passed by Congress. The first was the CFTC Reauthorization Act of 2008. Some of the key provisions to the act included a new category to register retail forex dealers, the application of the commission's anti-fraud authority to specific retail off-exchange forex transactions, and minimum capital requirements for retail forex dealers

The second act was the Dodd-Frank Wall Street Reform and Consumer Production Act of 2010. Dodd-Frank required that all off-exchange retail forex transactions be conducted according to federal agency regulations. Other requirements referred to disclosures and recordkeeping, reporting, and documentation. The FXDC also addressed mandatory registration required by the CFTC through the National Futures Association (NFA) for retail foreign exchange dealers (RFEDs), futures commission merchants (FCMs), forex commodity pool operators (CPOs), and commodity trade advisors (CTAs).

Adopting these regulatory changes were important to the CFTC in order to protect the American public from retail foreign exchange fraud. The FXDC objected, saying the new rules would put an undue burden on and stifle the foreign exchange industry.