Going offshore to escape the CFTC

Hallo dk58198, look for a post I put up, believe it’s #1412 – contains extensive details on Pax Forex. Welcome to the thread, and please post any additional data you discover on Pax, etc.

Questions have arisen as to why one or another FX broker has been targeted by CFTC.

Understood re MOU’s etc., and the hedging & FIFO rules; however I believe leverage is the crucial point. This is the focal issue for banks worldwide at the moment and it is not one which will go away. It certainly will not be “voted away” by the likes of the average FX trader; the current system is ‘post-democratic’ meaning the elite banksters make these decisions among themselves and merely deliver them – just a note in case anyone’s not yet noticed that.

Broker firms offering unconditional 1:500 and greater leverage will soon be gone, period, and not only for the U.S. resident trader. Ain’t I the cheerful one? It’s something to think on anyway, because if your trading strategy benefits significantly from higher leverage then now’s the time to get while the gettin’s … good, or as good as it’s going to get. Seriously. Seize the day, the sun’s well past meridian. :-}

Gypsy,
Yes, the CFTC regulators certainly don’t seem to understand or care that leverage is not a “one size fits all” proposition. Short term FOREX traders simply require more leverage. In the SEC/equities world this fact is acknowledged by the so called “pattern day trader” accounts which are afforded more leverage versus standard margin accounts. Maybe CFTC regulators would be willing to do something similar for FOREX. Probably stupid idea…

Oanda only offers 1:50 leverage maximum. Which I have been using since I first opened my account in January. As long as 1:50 doesn’t go away I will survive.

Safe , Secure , and Reliable ???

Quick note to say I received a spam email from “Noble Services Malta” this morning, promoting “www.forexbrokersinc.com” and my first thought was: Did the guys on the “Scalpers Unite - lets form our own brokerage” thread here put a business together that fast? :slight_smile: Nope, this is USDA 100% pure spam, not a heads-up from buddies.

That said, and with trades on as well, I sped right over to the website. Sign of the times eh?

So first thing I saw under “open a live account” was United States heads the pulldown menu list.

Second thing was, in reading through the Terms & Conditions, bloopers which gave me belly laughs.

Here’s item 6.9. in part:

Client will not use trading robots, expert advisors, or other computer program which were not approved in advance and in written by the Company. Without derogating from the above mentioned, Client is prohibited from using any robots, expert advisors, or other computer program which used to gain an unfair advantage or to abused any technical error, bug or defect in the Web site software or any other trading software been used by Company. The Company reserves the right to declare null and void any trade made that was the subject of such obese or unfair advantage and to take any money from your Account relating to the relevant trade including the right to close your Account.

No EA’s? Unless approved “in written”[sic]? I guess that would be an obese advantage.

I’ll go back in a bit and run their data through Clint’s checklist, but… wow on the legal writing, guys! :smiley:

• [B]ForexBrokerInc “Noble Services Malta” /B

Platform: MT4. – Min. initial deposit: 5 USD. – Max. leverage: 500:1 (microlots). – “Typical” Spreads: EUR/USD 2 pips, GBP/JPY 8 pips.
Website: Forex Broker Inc | Forex Trading | CFD Trading Point
Email: [email protected]

Notes:
see page there called Forex for spreads, stoplevels, size, etc.
see page entitled Account Types for deposit restrictions and other conditions

And if you’re interested in this sort of thing:
the Terms and Conditions document is a mess, starting with misspelling their own name and descending from there. Rare is the sentence therein free of errors (even the email I received introduces me to “Forex Borker Inc.”) so I’ve ignored most of them, BUT I’d be extremely loath to put up my hand to a forest thicket-cum-train wreck like this one.

One example:

  • [I]Should Company’s compliance department discover that an account holder is inside the excluded territory, than the Company has the right without notice to the client to immediately liquidate the account without any liability to the company.
  1. Company reserves the right to exclude Clients from certain territories from using the Web-site. Company does not allow, assist or encourage any form of circumvention of any restrictions placed upon these excluded territories. These territories includes: USA and it’s territories and Canada. If company discovers Client is in the excluded territory then Client must bare[sic] all sums deducted addition to a handling and processing fee.

[/I]So I went to Live Chat who knew nothing about these terms. Shocker! They welcome all North Americans. This clause in the T&C is a complete surprise to the chat op! It will be corrected immediately! and so forth.

More:

68. . . . . Client agrees that the Company may deduct tax, as may be required by the applicable law, but is not obligated to do so, from the results of the activity with the Company. You are aware that amounts that may be withdrawn by you from your account are “gross amounts”, from which the Company may deduct such taxes, and that you shall have no claim towards the Company with regard to such deductions.

and my favourite (a typo-free sentence, too!):

82. … [Y]ou are not entitled to make untrue and/or malicious and/or damaging comments with regard to the Company operation in any media or forum.

So hush up!

Didn’t see much as to licences, jurisdiction, or segregation of funds (they do reserve the right to loan and hypothecate them, etc., so…).

Finally, on the Contact Us page is a “toll free” listing which appears to be a NYC cell phone number.

{shrugs}

Hey, Gypsy

I clicked on the links in your post and was directed to:

• the website of MRC Markets (Russia)mrcmarkets.com, and to

• the email address for MRC support — <[email protected]>

(Try it. Click on the links in your quote, above.)

forexbrokerinc.com — obviously with www. in front — is the correct web address for Forex Broker Inc.

But, somehow your link got tangled with MRC (a broker currently on our List in Group 1). Any idea how that happened?

Now, check this out: When you put www. in front of forexbrokerinc.com, you land on the Forex Broker Inc. website — but, look how it’s shown here:

Forex Broker Inc | Forex Trading | CFD Trading Point

Trading Point? Are you kidding me? WTF?

I’d never imagine it WOULD happen, but O the mysteries of BabyPipsForum Coding my friend… we’ve discovered another one!

Can’t say I know how it happened, but when posting the details for forexbrokerinc I wanted to spare you the formatting fuss so I copied the MRC entry and simply replaced the data with the new stuff… voila! A learning experience in more ways than one!

Guess I’d better fix it if I can.

Now, check this out: When you put www. in front of forexbrokerinc.com, you land on the Forex Broker Inc. website — but, look how it’s shown here:
Forex Broker Inc | Forex Trading | CFD Trading Point

Trading Point? Are you kidding me? WTF?

:smiley: I noticed that as well but I passed it by thinking 'they like that name and have appropriated it as ‘the CFD trading point,’ didn’t think another thing of it. Except that silly little niggle of 'wonder where the b@st@rds got my e-addy…" Perhaps now I know? No, couldn’t be.

w00f. what a market on Fiber today, strange brew. addled me I reckon.

now off to mend the weirdness on the post, can’t do nought for the Euro lol.

Links working properly now.

This little oddity is affected as well by choices made under “Additional Options” available when posting in “advanced” mode.

It has to do with whether you tick “Automatically retrieve titles from external links” which I rather dislike as it gives you that long advert line, or [U]only[/U] “Automatically parse links in text” which I selected whilst disabling the ‘retrieve titles’ function. Thus we should have had merely clickable links without the ofttimes clumsy auto-labels. Yet we didn’t.

Weighty matters, LOL!

Seriously though, thanks for the heads-up, Clint; I’ve cluttered the status bar on my browser with so many wee info-bots there’s no room left for the http display I formerly used to test such things. cheers! :smiley:

Thank you Gypsy Trader I opened an account with FXchoice so far its good. I could have not got this far without you and Clint help.

Glad you’re set now dk58198 – good to hear it! :slight_smile:

Could i ask a question, if a citizen from malaysia open a live account at broker in usa, is that mean he have to pay taxes in usa and malaysia? Just wondering u know

Aside from the inherent risks of dealing offshore, this tread covers them in great detail, are there any legal restrictions or possible penalties for US citizens opening up an account with an offshore broker and taking advantage of highly leveraged hedged accounts?

My apologies is this has already been addressed and if you can direct me to a recent post, i would be appreciative. Your work on this topic is excellent and exhaustive. Thank you all for your contributions.

I know that you are looking for a quick and easy answer to your tax question, here in the Forum. But, be aware that nobody here (that I know of) is qualified to give tax advice or legal advice.

[B]The following is my opinion. I take no responsibilty for its accuracy, or for what you choose to do with it.[/B]

That being said, …

Generally, the answer to your question is: No, as a foreign person who is not a resident and not a citizen of the U.S., your forex profits will not be taxed by the U.S. However, be aware that retail forex brokers vary in the way they handle the reporting of forex profits to customers, and to the IRS.

Your U.S. broker may, or may not, send you a form called [B]IRS Form 1099,[/B] reporting your forex profits for the previous tax year. If your broker does prepare this form for clients, he may, or may not, submit a copy to the IRS. (Apparently, IRS regulations do not require this reporting in the case of forex accounts; however, some brokers file Form 1099, anyway.)

If you have substantial profits in your U.S. forex account, and if those profits are reported to the IRS on Form 1099, you may be contacted by the IRS for an explanation of why you have not filed a U.S. tax return and paid U.S. tax on those profits. You may, then, be in the position of having to prove to the IRS that you are not a U.S. resident or citizen. Obviously, you want to avoid this nuisance.

[B]So, have a talk with the U.S. broker you have chosen.[/B] If you have not yet decided which U.S. broker to trade with, pick one that you think you might like, [B]and ask that broker all your forex taxation questions.[/B]

A better source for U.S. tax information would be a U.S. tax accountant, or tax lawyer. But, it will probably cost you a fee, just to talk to those professionals.

There is a lot of useless information about taxes on the internet. However, this particular webpage was written by a tax accountant, and you may find it to be useful — Forex Education - Taxes - Interbank FX

As for your tax liability in Malaysia, that’s between you and the Malaysian tax authorities.

Yes, this question comes up from time to time. However, no need to apologize.

As far as we know, there are no U.S. laws/regulations/rules/restrictions prohibiting such an account.

The CFTC would surely chase down every U.S. resident who had the audacity to open an offshore account — [B]if[/B] they had the authority to do so. Thank God, they do not have that authority.

Evidently, there is nothing in the U.S. Tax Code prohibiting offshore forex accounts for U.S. residents or citizens, no matter how offensive the CFTC might think those accounts are. However, the Tax Code is tens of thousands of pages of nanny-state crap; so, who knows what’s buried in there?

Be aware that all your foreign financial accounts, including retail forex accounts, must be reported to the IRS on a form called FBAR (Foreign Bank Account Report), if the aggregate balance of all your various foreign accounts combined equals or exceeds $10,000. This reporting is required based on equity, not on gains or profits earned in these accounts. If you deposited $10,000 into an offshore forex account, and never earned a penny of profit, you would still have to report all the details of your account to the IRS, even though there would be no tax liability. If you had profits, they would have to be reported on your tax return, and would be added to your taxable income for purposes of figuring taxes owed. Remember, that the U.S. government taxes your worldwide income, regardless of where it’s earned.

Sorry. I didn’t mean to go on a rant.

Back to your original question — Go for it, open an offshore account with any broker who offers what you’re looking for. And don’t worry about government interference [B]on your end.[/B] However, expect the CFTC to look for ways to attack any offshore broker who is willing to deal with you.

Clint, thank you for your commentary. Very insightful and helpful. Looking forward to following this thread.

Thank you clint for the explanation. Much appreciated.

Does anyone use forexbrokersinc.com?

The CME Eurodollar futures contract is the highest combined volume than any other futures contract (perhaps the entire rest of CME futures combined). The contract size is $1,000,000 and the overnight margin is between $400-800. This is usually cut in half or more for day trading. So thats 1:1200 to 1:4000 leverage depending on whether or not you are day trading. My point is that futures already has high leverage. But forex is good because the contract size is customizable (micro/nano lots) combine that with high leverage and a smaller trader is in a much better position to trade without needing a large starting balance…