Association of Futures Brokers and Dealers (AFBD)

What Is Association of Futures Brokers and Dealers (AFBD)

Association of Futures Brokers and Dealers (AFBD) was an organization established by the major London futures exchanges to provide regulatory supervision for brokers, dealers, and other practitioners in the futures industry.

The association was a self-regulating organization when it was founded in 1984, but was later incorporated into the Financial Services Authority, or FSA, which itself has since been abolished, with its regulatory duties split between the new Financial Conduct Authority, or FCA, and Prudential Regulation Authority (PRA), which is structured as a limited company owned by the Bank of England.

Understanding Association of Futures Brokers and Dealers (AFBD)

The Association of Futures Brokers and Dealers was formed to be a self-regulatory organization to oversee futures broker and dealer activity. The association developed and maintained standards to which British brokers and dealers on futures exchanges were expected to adhere.

In 1991, AFBD merged with The Securities Association to form the United Kingdom's Securities and Futures Authority, or SFA, which sets the rules of fair practice as well as capital requirements for firms active in the securities, futures and options markets.

In 2001, the FSA was launched, or rather renamed from the former Securities and Investments Board, taking over the role that had been played by SFA.

In 2010, then Chancellor of the Exchequer George Osborne announced the abolishment of the FSA with plans to delegate its powers across other agencies and the Bank of England. The plan was finalized in 2013. FCA is the "conduct regulator for nearly 50,000 financial services firms and financial markets in the UK and the prudential supervisor for over 48,000 of those firms." Bank of England-owned PRA is develops rules requiring financial firms "to hold sufficient capital and have adequate risk controls in place."

Regulation of Futures Brokers and Dealers today

Most futures firms today are regulated by the FCA. The agency issues warnings, such as this one, against specific brokers it deems as posing potential risks to investors: "We believe this firm has been providing financial services or products in the UK without our authorization. Find out why to be especially wary of dealing with this unauthorised firm and how to protect yourself."

FCA maintains a Financial Services Register that allows consumers to ensure that specific futures dealers are authorized by the agency. It also maintains a helpline for those who have been approached by an unauthorized firm or feel they may be a victim of a scam.

"Financial markets need to be honest, fair and effective so that consumers get a fair deal," according to FCA. "We aim to make markets work well—for individuals, for business, large and small, and for the economy as a whole."