Broker reliability + behind the scenes

How do I know that the broker will not use my money to do other things? Which Act outlines how the broker must handle our money? How often does the CFTC check brokers to make sure that they are conducting their business according to regulation. What happens it the broker goes bankrupt?

Also, how does forex actually work behind the scenes. Say I go long on AUD/USD, for 100K, does this mean that for my deposit of $1K, the broker will lend me enough USD to buy 100K AUD? Am I correct in my understanding that I pay back the broker what I borrowed in USD when I close my position? I borrow from the broker, but where does the broker get the money from? Also, theoretically, I can keep my position open for an eternity. Does this mean that the loan from the broker is essentially an interest only loan that you can theoretically never pay back? Also, why does the large banks not offer retail forex?

Also, what about CFD brokers who also do FX? When you trade with them, is it different from the other FX brokers in the sense you do not actually trade currency but rather contracts which bet on the movement of the currency. Who are the CFD providers? Is this always the broker? If so, why would a broker be willing to allow you to go long on say EUR/USD, when the market sentiment is clearly bearish for the USD and downward movement of the USD would cause them a loss that would probably exceed what they charged from you in the spread + commission?

In the USA brokers are not regulated as in terms of not using your money as collateral for your own trades. But a NFA registered broker needs like a million dollars, trading ethics, legal ethics and deceptive practices. A broker cant use your funds as collateral for anything other than forex. As the broker is lent credit and thats how you get your leverage. It is the broker decision to join the NFA. It helps that they join so no one think of the as a fly by night company. As for using your money for other things than your trades, a NFA broker is in violation.

Read up a bit on how futures market works.
FX is essentially a commodity market; it’s
just that it trades money not coffee, sugar,
oil, oranges, etc. Market concept is exactly
the same. They are regulated and they
have to have their accounting reported.

a broker doesnt have to register with the NFA. If they dont who regulates them? Forex futures are regulated. Forex spot market isnt regulated.