On the [I]Broker Aid Station[/I] forum, a discussion got started about trading through foreign brokers who are outside the jurisdiction of the CFTC. That particular topic really doesn’t belong on that forum. So, I’m opening this thread, as a place where that topic can be continued.
I’ll start this thread with a rant about the CFTC (because I have some ranting to get off my chest). Then, in subsequent posts, we can talk about specific foreign brokers, and whether there are advantages to trading with them.
But, first things first. Here’s my rant:
Getting free of the CFTC, the NFA, and the rest of the Nanny State
We’ve been conned. By Gary Gensler, the head of the CFTC. On another thread, I called Gensler “a sneaky, little weasel”, and I stand by that description.
Gensler set up a straw-man — the 10:1 leverage limit — and we all bravely attacked and destroyed the straw-man, thinking it was the enemy. In 9,000 public comments to the CFTC, we battled against that 10:1 straw-man, and we tore it to shreds; and we said, “If you ram this 10:1 thing down our throats, we’ll take our business offshore.”
All the while, Gary Gensler and his crew were saying, “Gotcha — you’ll take [I]50:1[/I], and you’ll thank us for it. And, by the way,
[I]like hell[/I] you’ll take your trading business offshore!”
The CFTC never intended to impose a 10:1 leverage limit on retail forex in the U.S. From the very beginning, their objective was 50:1; and they achieved their objective masterfully.
The phony 10:1 proposed limit was so extreme that we were relieved when the CFTC “relented”, when they “listened to the voice of the forex community”, when they set the leverage limit at 50:1, instead.
Gensler wrote the sheet-music, and we sang the song. Have we been had, or what?
Many reasonable folks, including several on this forum, have pointed out the hazards of using too much leverage, and have endorsed the new CFTC limit. Which misses the point entirely.
It is not the proper business of government to tell us how many calories we may consume, how much we may drink, how much of our paychecks we may spend on lottery tickets, or HOW MUCH FOREX LEVERAGE WE MAY USE.
And it’s not the proper business of government to tell U.S. residents where they may do their banking, or where they may do their trading. Finally, it’s not the proper business of government to tell U.S. forex brokers where they may set up foreign branches, or whom they may accept as customers in those foreign branches.
It IS appropriate for the government to require brokers to furnish full and honest disclosure of the risks involved in forex trading; and it IS appropriate for the government to require that only adults be permitted to participate in this market. Beyond that, the government has no legitimate role, and they should butt out.
The CFTC has U.S. forex brokers by the throat: by threatening their ability to do business IN the U.S., the CFTC can interfere with the rights of those brokers to do business OUTSIDE the U.S.
But, the CFTC has no authority over foreign brokers who operate entirely outside the U.S. And under current law, the CFTC has no authority over individual traders [I]who trade through those foreign brokers that are not subject to CFTC regulation.[/I]
The U.S. government claims the authority, through the IRS, to require U.S. residents to report foreign accounts which we hold — bank accounts, brokerage accounts, etc. But, they cannot (yet) prevent us from having those accounts.
The CFTC, and their sock-puppet the NFA, are behaving like the rest of the Nanny State: they are acting like our rulers, rather than our public servants. These people seem to believe they have the right and the power to do anything they want to do.
They’ve never had the right, and they never will have it.
They may have the power — but, not for long.
_______________ END OF RANT ________________
Next post: some things I’ve learned about ACM and dbFX.