The foreign currency exchange designations help us to understand the constitution of the foreign currency exchange world. Here you will find out various details about the underlying designations in foreign currency exchange and what their importance is.

Foreign currency exchange dealer members

These individuals are the most basic constituent of foreign currency exchange market. There will be no trading chances for the retail investor without the deal members. They handle the credit, handle clearing, back officer operations, and provide an orderly market for investors. The role of Foreign currency exchange dealer is combination of both the market maker and specialist in the equity market.

Futures commission merchants

Firms acting as Forex member dealers needs to be registered as futures commission merchants (FCMs). In the U.S., the FCM is the market maker in the retail Foreign currency exchange world. There are strict requirements for them by CFTC and NFA, for e.g. sufficient capitalization and antifraud and moral necessities. It is advised to avoid trade with any retail Foreign currency exchange firm in the U.S. that doesn’t have one of these foreign currency exchange designations.

Introductory Brokers

An introductory broker (IB) is a foreign currency exchange broker responsible for providing advices and technical support and one of the important designations in foreign exchange. He concerns the actual trade execution and floor operations to an FCM. Market cannot be made by an IB himself; he relies on an FCM for price and execution. The IB is focused on his clients. Generally, an IB works with a single futures commission merchant, so the client is limited in market depth and execution options.

Commodity Trading Advisers

A commodity trading adviser (CTA) is one of the important designations in foreign currency exchange; these are proficient in trading assets and futures contracts. You can consult a CTA for advice and strategy tips for your assortment, which can be a good way of learning about trading futures. A one-on-one relationship can be developed, which is another effective way to learn about Foreign currency exchange trading. Every CTA is required to be registered with the NFA and clear a series 3 or series 7 exams.


In majority of foreign currency exchange markets the broker acts as a conciliator for matching buyers and sellers. And for this, he gets a commission. Though, the broker is not considered an important part of the retail Foreign currency exchange market. In retail Foreign currency exchange, role of a broker is played by an IB or FCM representative. These individuals have restricted use because the broker is allowed to trade with a single market maker, as a price taker, whereas the FCM is the counterparty to all trades.

Managed Accounts

Managed accounts are the last foreign currency exchange designations referred as the watered-down foreign exchange version of a mutual fund, with no rigid structure. An investor provides trading prudence to a trader or firm to trade an account on their behalf.

This is a feasible solution for traders seeking to expand into foreign currency exchange without hands-on involvement. It’s an effectual means for retail investors to profit from the knowledge, resources, and experience of an investment manager without the restrictions of investing in a hedge fund or other alternative investment.