Going offshore to escape the CFTC

Hello, I guess because bhs and I had a “dispute”. However, nice to see that thread is open again and I definitely am sorry for any inconveniences. Have fun and may everybody find it’s best brokerage! :slight_smile:

Following Bravehost’s comments on rich vs poor: Or, might that be the reaction when the rich (Wall Street) see the money-flow changing direction from stocks to Forex? Here are some quotes from a CNN Money article: “Day Trading the Euro in Your Pajamas”

Lydia Idem-Finkley said she was a stock trader for most of her adult life – until she gave birth to her first daughter. Becoming a mom was one of the main reasons why Finkley says she no longer trades stocks. Instead, she took advantage of her sleep deprivation and moved into the 24 hour, seven-day-a-week world of currency trading.
“We would stay up all night looking at currency charts because neither one of us could sleep,” she said.

Finkley is one of the roughly half a million investors in the U.S. who have switched from trading stocks to trading currencies in the past decade.
Currency day trading was essentially a non-existent market less than 10 years ago. But retail investors now make up 8% of the daily volume in the $4 trillion forex market, according to the Aite Group, a financial consulting firm.
It’s a unique demographic too. Currency traders are increasingly younger - with two-thirds of them under the age of 50. A higher percentage of females trade currencies than stocks as well.

“In the late 1990s, you didn’t need to trade forex because you got the volume and volatility you were looking for in stocks,” said Raghee Horner, a South Florida-based trader who has traded currencies for the past 10 years. “Now if you’re really looking to trade volatility, you have to look at currencies.”

‘Traders’ reasons for switching over to currencies vary.’ Finkley said she found tracking a single country’s economy easier than trading stocks, where an investor has to monitor economic conditions but also the details of what goes on in a major corporation. Others said they like the off-market hours that forex trading allows as well.

‘I know the reason sounds trivial, but having access to a dynamic, liquid market at any time is particularly intriguing to traders,’ said Glenn Stevens, CEO of Gain Capital, the parent company of Forex.com. ‘You don’t have to compartmentalize your day around trading hours.’ July 21, 2011 written by Ken Sweet CNN Money

Seems to me that continuing along the lines of ‘beat them’, instead of ‘join them’; will only result in most US Forex traders going offshore. I find it hard to imagine they don’t understand who the real losers will be. It’s a global market in a global world - no longer US-centric…

Just wanted to say thank you to all of the contributors to this post. You guys (some knowingly, some not so) are making this world an even better place to share!

I have just gone through Group 1 of our List, to gather contact information for those brokers who will do business with U.S. residents. See my next post for these details.

In the course of visiting the websites of all the Group 1 brokers, I have identified 4 more brokers which must be removed from this Group:

[B]UFX Bank (UK)[/B] — if you access their website from the U.S., you now get this message:

“Registration is not permitted.
Due to American federal trading regulations,
trading on the UFX trading platform is not open
to citizens of the United States of America.”

[B]Maximus Capital Markets (Latvia)[/B] — their website no longer exists.

[B]Arab Financial Brokers (Kuwait)[/B] — their website no longer exists.

EDIT: The info shown above for Arab Financial Brokers is incorrect.
Their website has not been taken down.
I have restored this broker to page 1 of our List.
[B]Forex Place - 4xP (British Virgin Islands)[/B] — their website now says:

“4xP does not accept applications from U.S. residents.”

Later today, I will move these 4 brokers from Group 1 to Group 2.

Also later today, I will post a recommendation on how to make initial contact with any of the remaining offshore brokers on our List, without visiting their websites.

I think Nigeria has a higher level of business integrity than Latvia. Many of the so called “Russian scams” are indeed Latvian fly-by-night operations, existing only in cyberspace and the imaginations of their victims. I looked into some Latvian “banks” in the 90s offering 80% but all were too lazy to answer the telephone, so I missed some “opportunities!”

The CFTC claims to have regulatory jurisdiction over any offshore forex broker having a “presence” in the U.S. — by which they mean an office, an introducing broker, or even a U.S. telephone line.

In addition, the CFTC contends that any “solicitation” of U.S. residents by offshore forex brokers makes those brokers subject to CFTC jurisdiction. And they say that merely having a website which can be accessed by a U.S. resident constitutes “solicitation” on the part of the broker, if that resident is introduced to the broker via the website.

Some offshore brokers are responding to this CFTC crap by requiring U.S. account applicants to certify that they have not been “solicited” in any way, shape, manner or form. This includes certifying that they did not learn about this broker, or become interested in opening an account with this broker, as a result of visiting the broker’s website.

For example, see this PAGE from the Investors Europe (Gibraltar) website.

Okay, let’s play the CFTC’s stupid game.

From now on, I suggest that any member of this Forum who (1) is a U.S. resident, and (2) wants to inquire about opening a trading account with any of the offshore brokers on our List, do the following:

• Find the broker’s email address in the 3-page List of Offshore Brokers, at the beginning of this thread.

• Make your initial contact with this broker via email, and mention that you got the broker’s name and email address from an online forex forum where offshore brokers are discussed.

• Explain in your email that you are a U.S. resident interested in moving your forex trading to an offshore broker.

• Ask for information about live trading accounts, and instructions for opening an account.

• Do not mention the broker’s website. Let the broker refer you to his website.

• After this initial contact, you are free to visit and use the broker’s website, because your email documents the fact that (1) you solicited the broker — he did not solicit you, and (2) you did not find this broker by visiting his website.

“O’er the land of the free and the home of the brave?”

Well, I don’t see much of the “free” part and not most of the second either. …
Aren’t the American people supposed to fight for their rights? and depose a dictatorial Government? What’s with hating so much the dictatorships (Libia, etc) when here, its a kind of totalitarian system under disguise, but enforced by the bankers/politicians? These thieves, After wrecking the American economy and sinking the dollar (Bernarke, Morgan and company) are stll not happy and want the US citizens to pay for their felonies, how? taxing the sh&t out of every possible profitable business we could exercise, prosecuting and persecuting the world over to impede the hard-working Americans to earn a buck if they don’t take half of it from them. ? Why are foreign brokers “giving in” to the CFTF? I suppose its not that they are giving in, but that the CFTF has imposed bureaucratic burdens on them about reporting and/or complying with a number of requisites in regards to the US investors …how can they “impose” something to a Company out of their legal jurisdiction you may think?, well that’s where the abuse comes in, the powerful country abusing the small, which other way can I understand it? and at the same time as someone said, abusing its own citizens So they just opt out of American investors, thats very simple to understand. WHy would they want to get in trouble? And you said it right, the government is supposed to SERVE the people not vis versa.:36::37:

Works fine for me, just visited it.


Now it’s working for me, as well. Maybe they were down for maintenance on Saturday.

Anyway, good catch, Jacob.

I’ll restore Arab Financial Brokers to the “A” list.

I have added FIBO Group Holdings Ltd (Cyprus) to the list of brokers who will not do business with U.S. residents.

See — 301 Moved Permanently

The Latvian Financial and Capital Market Commission has revoked the license of Maximus Capital Markets in January this year for violating the provisions of the Law on the Financial Instruments Market and Law on the Prevention of Laundering the Proceeds from Criminal Activity (Money Laundering) and of Terrorist Financing: FKTK

Makes me wonder what exactly they have breached but sounds pretty scary anyway. :46:

FinFx is really good…you can check them out here:


Sometime this coming weekend, July 30-31, I will move the 3-page List of Offshore Brokers to the end of this thread. I do this periodically, because the List tends to sink out of sight as new posts are added to the thread.

If anyone has any updates to the List, the next two or three days would be a good time to add them.

George Soros thought the Obama Nanny State was just fine, until it started to mess with [B]him![/B]

He doesn’t like the idea of being more closely scrutinized by the SEC. So he’s returning all of the client money he’s been managing in his hedge fund — sending a cool billion dollars back to his clients — effectively closing the hedge fund. Adios, amigos. Clients are a pain in the ass, anyway. Right, George?

And, really, that billion was just chump-change.

From Wikipedia (George Soros - Wikipedia, the free encyclopedia) —

“Soros is Chairman of the Soros Fund Management. In July, 2011, Soros announced that he was returning outside investment money (valued at $1 billion) and will only invest his own $24.5 billion family fortune because of new U.S. Securities and Exchange Commission disclosure rules.”

Fortunately for George, he has two sons to help him manage all that family money.

1 Like

Hey people, I am just passing by, because I was talking with the representative of a broker, that seems like to be accepting US clients. ANd I asked how they managed to do that, and the answer I was given was the following:

the main problem was the IRS because the returns from offshore investments for US residents is not being taxed as it enters back the US and most traders do not report it. CFTC can’t take anyone to international court unless an international law is broken. as for now there is no laws againset offshore brokerage firms.

So what do you think? I didn’t know the problem was the IRS, I thought the IRS was only an american citizen problem, and not a limitation on brokers.

That’s just his rough and ready interpretation of why some of the the regulations were introduced. Tax avoidance is one of the reasons. Of course the regulators also claim that they are trying to protect us by limiting us to their regulatory regime.

As to whether the CFTC can prosecute foreign brokers for not registering in the U.S., well they can if they can get their hands on them, and then satisfy a U.S. court that they have jurisdiction over the broker in the first place, which I doubt they do. He’s just saying that they can’t extradite him, which is probably true.

Also the CFTC may try to get foreign regulators to pressure the brokers that they regulate.

Actually it’s not clear to me that the CFTC will even try to police foreign brokers that do not solicit in the U.S. They may have no intention of doing so.

For sure the Treasury / IRS is trying to get information as to U.S. citizens with brokerage accounts abroad who are not paying taxes on them and filing the FBAR report as required, in order to prosecute them for tax evasion. There are all of the UBS cases on that. This is indeed where the majority of effort abroad will be made. But this is not a problem for you and me as long as we file the required returns honestly and pay tax on our foreign profits. Of course these foreign brokers are probably not going to issue 1099’s so you will have more work to do to compute U.S. taxes that are due.

They did prosecute UBS for aiding and abetting tax evasion by its U.S. clients.

By the law, US residents are required to report their worldwide income and pay taxes on it to the US IRS. This is not a piece of legal advice, but I am certain any US lawyer can confirm this fact to you. Failure to report any foreign income will be considered an instance of tax evasion - a serious federal felony. If some traders don’t report it, they’re simply breaking the law.

The US CFTC restrictions apply to brokerage firms, not to their customers. Yet even if one is trading with a foreign broker and makes profits from this activity, that income is to be reported. The same applies to foreign-based corporations: Americans are allowed to form, own, and operate them yet they still need to pay taxes on their personal income from these corporations to the US IRS.

A Big Thank You

August 3, 2011

[B]London-based Forex Capital Markets Ltd. Ordered to Pay $140,000 Penalty to Settle CFTC Charges of Acting as an Unregistered Retail Forex Exchange Dealer[/B]

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today filed and simultaneously settled charges that Forex Capital Markets Ltd. (FXCM Ltd.) of London, U.K. acted as a retail foreign exchange dealer (RFED) by conducting retail leveraged forex transactions with U.S. customers without registering with the CFTC under the agency’s regulation 5.3(a)(6)(i). FXCM Ltd. has never been registered with the CFTC in any capacity.

The CFTC order requires FXCM Ltd. to pay a $140,000 civil monetary penalty and to cease and desist from further violating CFTC regulation 5.3(a)(6)(i).

Today’s action stems from new regulations that the CFTC enacted on October 18, 2010, implementing certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The new regulations also require forex dealers to take steps to protect investors, including maintaining capital and records, to reduce risk and increase transparency. (See CFTC Press Release 5883-10.)

The CFTC order finds that, from October 18, 2010 through October 29, a period of 11 days immediately following implementation of the new regulations, FXCM Ltd. acted as an RFED counterparty to U.S. customers who were non-Eligible Contract Participants in connection with leveraged retail forex transactions without registering as an RFED.

The CFTC’s order emphasizes that the CFTC’s registration requirements for commodity professionals are “a cornerstone of the regulatory framework enacted by Congress to protect the public.” Registration is the “linchpin of the CFTC’s ability to perform its statutory functions of monitoring and enforcing” the Commodity Exchange Act (CEA), and the CFTC has recognized that the operation of an unregistered entity is a “serious violation” of the CEA and a “threat to the integrity of the industry,” according to the order.

CFTC Division of Enforcement staff members responsible for this case are Eugenia Vroustouris, Rick Glaser, and Richard Wagner.

Media Contacts
Dennis Holden

</title> <meta content=“MSHTML 6.00.6000.16981” name=“GENERATOR” /> <script id=“ssInfo” type=“text/xml” warning=“DO NOT MODIFY!”> <ssinfo > <fragmentinstance id=“fragment1” fragmentid=“web_header” library=“server:NAVIGATIONFRAGMENTS”> </fragmentinsta

Hi bravehoststamps,

Last year, there was an 11 day delay in repatriating US residents from FXCM UK back to FXCM US. The CFTC required the repatriation to be completed by October 18, 2010; however, at the same time, the Financial Services Authority (FSA), FXCM UK’s regulator, required individual consent from each account holder before FXCM UK could initiate a transfer. In seeking to comply with the FSA requirement and prevent disruption to clients’ open positions, FXCM UK missed the CFTC’s deadline for completing the process as it sought to properly notify affected clients and conduct transfers in a timely and orderly fashion.

We regret the brief 11 day non-compliance in repatriating US residents, but the delay meant that the impact on our clients trades was minimized (as opposed to forcefully closing trades and being in non-compliance with UK regulations) and ensured a smooth transition of accounts from FXCM UK to FXCM US.

Our full statement can be found here http://ir.fxcm.com/phoenix.zhtml?c=2...217&highlight= . Please feel free to let me know if you have any questions.


Thank you for the clarification. Would the US CFTC be able to do anything to FXCM if there was no FXCM US and no other business presence of FXCM in the US of any sort whatsoever?