In retail over-the-counter forex, the dealer is the other side of the trade: "You are trading against the dealer", the first of the eight points in the CFTC's forex customer advisory, which also states that two out of three forex customers lose money and that customer deposits are not protected. The deposit behind a position is set by rule rather than by the platform: NFA Financial Requirements Section 12 requires a forex dealer member to collect a security deposit of 2 percent of notional value on ten named major currencies and 5 percent on everything else.

The dealer quotes the price and holds the money

There is no exchange in the middle. The CFTC advisory lists the consequences directly: the dealer controls the trading platform, the ability to close or offset a position is limited to that dealer, and deposits are not protected. It also warns that many frauds start on social media, that unregistered offshore dealers and crypto-only funding are warning signs, and that a firm with no verifiable U.S. physical address and customer service run through a messaging app is another.

Registration is checkable before any money moves. The advisory points to the CFTC's registration check at cftc.gov/check and to NFA BASIC at nfa.futures.org/basicnet for disciplinary history. Verifying the person who contacted you is a separate step, set out in check the professional and the person contacting you.

Section 12 sets the deposit at 2 percent or 5 percent

NFA Financial Requirements Section 12 names the ten currencies that carry the 2 percent minimum: the British pound, Swiss franc, Canadian dollar, Japanese yen, euro, Australian dollar, New Zealand dollar, Swedish krona, Norwegian krone and Danish krone. Every other transaction takes 5 percent of notional value. The rule was adopted on 1 December 2003 and has been amended repeatedly since, most recently with an amendment effective 18 March 2026, so the figure to quote is the one on the rule page rather than a remembered number.

The same rule makes the shortfall the dealer's problem to act on, not a matter of discretion: a forex dealer member is required to collect additional security deposits from a retail customer, or liquidate that customer's positions, when the deposits held are not sufficient to meet the section. NFA's Executive Committee can temporarily raise the requirements under extraordinary market conditions.

Example: $2,000 behind $100,000

The CFTC advisory gives the shape of the position: a $100,000 position with only $2,000 in the account. That is the 2 percent minimum in Section 12 applied to a major pair.

Work the moves against that deposit. A 1 percent adverse move on $100,000 is $1,000, half the deposit. A 2 percent adverse move is $2,000, the whole deposit. A 3 percent adverse move is $3,000, which is $1,000 more than was ever deposited, and the CFTC advisory states the outcome plainly: you could lose all of your margin and more.

Change the pair and the arithmetic changes with it. A currency outside the ten named in Section 12 carries a 5 percent minimum, so $100,000 of notional needs $5,000, and the same 2 percent adverse move of $2,000 takes 40 percent of the deposit instead of all of it. The gap between the deposit and the exposure it supports is worked through in a deposit is not the size of your exposure.

What to settle before the deposit

Five facts decide the answer, and all five are documented somewhere before the first trade: the dealer's registration status and disciplinary history at the two sources named in the CFTC advisory; the security deposit percentage applied to each pair traded, against the 2 percent and 5 percent minimums in Section 12; the point at which the dealer will liquidate rather than call for more; the documented withdrawal terms, including fees and processing time; and the identity of the legal entity holding the money.

The last one carries the rest. Where the dealer is the counterparty, the price feed, the venue and the custodian of the balance, every question above resolves to the same firm, and the liquidation mechanics that follow a shortfall work the way they are described in a margin call can end in liquidation.

Source references

Primary sources used for this guide. Follow the links for the original scope, definitions and conditions.