Going offshore to escape the CFTC

Broker Discussion Forex Brokers
3260

Hi Tallinex,

I did some research on offshore brokers from what I read here and what is my experience.

Now checking through carefully your whole website, there is one thing that makes me worry and I am interested about your opinion. Tallinex is not regulated by any official regulators, at least that is the information in the beginning of this thread and that is also the result of my own research.

As I said, everything looks fine with “you”, however as most brokers can prove where they are regulated, it does take courage to deposit for a broker who is not regulated like its competitors.

Thanks,
FE

3261

Well, we agree on that point, at least.

I’m glad you found some value in our efforts here.

If you had started your first post here with that sentence, and then followed it with a list of names, and then finally suggested that we look into your recommendations — well, we would have gotten off to a very different start. And, no doubt, we would already have a lively discussion going, thanks to you and your suggestions.

Totally wrong. Tallinex has seen value in this thread, and has capitalized on an opportunity to present their story to the readers of this thread. Tallinex has been well-received, for the most part, by those readers, as you can readily see from the many questions and comments directed to the Tallinex rep.

Frankly, I’m amazed that other brokers on our “A-List” (Group 1 in the Offshore Broker List) haven’t seen — and jumped on — the same opportunity. If the other two “Trusted Brokers” on our List wanted to join the conversation here, they would be warmly welcomed. Ditto for your beloved ProfiForex.

Perhaps, satisfied customers of those brokers (such as yourself) should drop a note in their broker’s “suggestion box” regarding the opportunity here.

Unless and until that happens, Tallinex has our undivided attention in a way that the other brokers do not, because Tallinex had the initiative to come here and get it. I don’t fault them for that — I congratulate them. And you should, too.

Nah. You and I got off on the wrong foot, because of that combative nature you were confessing at the top of your post.

But, there’s no need to pick up your ball and bat, and go home. You’re welcome here.

Come back any time, and bring ProfiForex with you.

.

3262

If you read back through this thread a little then you’ll find a section that was quite heavily devoted to the subject of “regulation”. The basic conclusion / agreement was that regulation provides no advantage to traders but creates an unnecessary administrative and financial burden for brokers. As was mentioned at that time, Refco, PFG Best, MF Global and dear Bernie Madoff were all regulated firms, yet stole far more money from clients than all other brokers in the entire world combined! In addition, had it not been for “regulation”, Alpari (UK) would still be in business as it was only a lack of reserves that brought them down, not foul play or issues with client’s funds.

Of course, the most obvious downside of being a “regulated” broker is that US residents are not permitted, which is the whole point of this thread.

3263

And, you took the words right out of my mouth. :slight_smile:

Well stated Paul.

Only one small disagreement from an earlier post… I’m the type who wouldn’t put the entire amount of my trading capital with a single broker either. And the increased leverage / lower margin requirements of off-shore brokers allow the trader to have that choice. That’s a decision that each individual must make for themselves. But, in my mind, I would think that if the CEO of a brokerage has a gambling issue and wanted to play with customer money (regardless of whether or not the broker is regulated, because as we’ve seen and you’ve noted, that doesn’t make any difference), I doubt very much that a brokerage representative would know what the CEO is doing behind closed doors. All due respect intended, of course.

:wink:

3264

Hi Clint,

I am always surprised how great your problem solving skills are. That was a nice ending of your post with him.

Hi Tallinex,

actually I started to read the whole thread from the very beginning and work myself through the whole 3000+ posts.

I also respect your comments as I read them all and it always good to hear an “official” opinion. Your answer however sounds very very very self-confident. Well, of course there is a reason why many brokers have regulation and also a reason why many customers ask about it.

Obvious there are some examples when regulations could not help - like you wrote yourself. But as in this thread earlier stated, CFTC regulations also helped the shady industry to regulate and close down many untrustable brokers. Without regulations are world would go into chaos.

Obviously you are not regulated so you are against regulation as it could be a disadvantage for you. For me, as a potential customer it is however important to understand [I]why[/I] you do not have a regulation as after all I make the deposit with my own money. That was the reason I asked the question.

Looking at our list of 14 possible offshore brokers, FXChoice is for example regulated in Belize, without excuses why is it bad to have a regulation. Rather, they decided to be regulated and stop this kind of a discussion right in the beginning. So regarding to your last sentence, I do not agree that an offshore broker has to be unregulated. You pointed out the point of the whole thread. Then I also point out that offshore brokers are the point of the whole thread and not that they have to be unregulated offshore brokers.

After all, I am happy to read your posts, but you do not have to jump at people in attacking mode only to present that your company has only advantages and maybe are lacking some of the issues that others do have.

I wish it was like Clint said, that other brokers would be here, because I would like to see a broker vs. broker setup about regulations.

All the best,
FE

3265

Tallinex is not at all against regulation that actually protects clients … only the fact that regulation, as it stands, does nothing of the kind, and is entirely ineffective at stopping the very things it should. In addition, it adds mountains of “ivory tower” rules plus an unnecessary financial and operational burden on brokers.

For example, a broker wishing to open up in the US must have a minimum $20,000,000 in reserves at all times - even if they only have one $1,000 micro account client! In what reality can that be considered reasonable? Worse, if their reserves dip below that amount for even one day, they can be hit with a huge fine and banned from operating… as FXDD were. Alpari (UK) were put out of business in the same way - their systems, processes,compliance, etc. met all relevant requirements, and there was not the faintest issue of clients being at risk, but they no longer exist due to imbecilic regulation.

As for Belize, their “regulation” is actually just “self-regulation” - no different to the basic business regulations that exists in all jurisdictions, and nothing like financial services regulation in the US/UK/EU/Australasia.

Quote from the Belize IFSC website: The Commission relies on self-regulation, meaning that while government sets overall standards, it expects much of the actual work in terms of monitoring and compliance to be done by the industry itself.

So, ForExchange, you’re quite right - off-shore brokers don’t have to be unregulated… it’s just that there’s no real difference between being regulated and unregulated in the jurisdictions that still allow brokers to accept US residents.

On the protection front (in jurisdictions which do actually offer that), that “protection” isn’t provided by the regulator at all - it’s provided through government-backed compensation schemes i.e. the Financial Services Compensation Scheme in the UK.

3266

Thanks. This had more to do with my question than your earlier post. Appreciate that.

3267

How did you manage to get hooked up with them? I just chatted with one of their representatives, told them I was looking to open an account, that I was a US Citizen and would that present any problems.
They responded with a link to a web page from the Law Dept. at Cornell University and told me that, and I quote, “Dukascopy cannot accept US clients”.

3268

Tell them you have a net worth of $20 million and they will welcome you with open arms (as brokers everywhere will) :slight_smile:

3269

So it’s not that it’s illegal for a broker to accept US clients, just that generally they aren’t worth jumping through all the hoops with the reporting required in a country where it has been agreed that information demanded by the USA must be supplied?

3270

Actually, I gave up and opened an account with your firm. I see you’ve been posting on here since 2013 so, in my mind, that gives you at least a little bit of credibility, inasmuch as you are still around after 2 years. I am just concerned about the CFTC thing, and their overbearing reach. In my mind, as long as you declare your earnings on your taxes, and aren’t laundering money, or providing funds for anything like arms, drugs or terrorism, why should the government care whether or not you trade offshore, with a broker that will trade according to your needs? They will still get their pound of flesh at the end of the year and, really, isn’t that what it’s all about for them? In summary, why should it be illegal to trade with an offshore broker, as long as you’re properly declaring all your profits/losses at year end?

3271

In simple terms, if you have a lot of money (even if you just won it all in the lottery and can’t read/write/count to save your life) then you’re considered “financially astute” and get elevated above the legislation that applies to people of more modest means, who are classified as “financially stupid” and in dire need of nanny-state intervention.

3272

It isn’t illegal to trade with an off-shore broker - that’s a myth. The authority of the NFA/CFTC/SEC stops dead at the US border and there’s no US law that prevents a US resident from opening a bank account or brokerage account with any foreign organisation.

Of course, if you don’t declare your trading account and/or any profits you make, then you’re likely to end up in trouble, but that’s a different issue.

So, if the SEC has no authority abroad, why are US residents pushed away with a long stick? Because the SEC requested a favour from their counter-part organisations in various jurisdictions, and most of them obliged by instructing their members to divest US resident clients.

That’s the long and the short of it. :slight_smile:

3273

That makes sense, what I don’t quite understand is why would they wanna do that to their residents, Is there even one good reason for it, or just plain arbitrary power trip.

3274

I’ve been following this thread for quite some time. I see where TradersWay, FXChoice, and Tallinex are at the top of the list as far as brokers go. I also see where it says that FXPrimus does not accept US clients, but recently I got an email from one of their account execs, saying otherwise. Can anyone confirm this???

3275

In the fine print at the bottom of the FX Primus website Home page, you will find this statement —

FXPRIMUS does not offer its services to the residents of certain jurisdictions such as:
USA, Australia, Iran, Syria, North Korea, Myanmar, Algeria, Ecuador.

Ask that account exec. to explain the discrepancy.

.

3276

I recently decided to standardize on MT4 execution, coming
from Dukascopy, so I needed a bridge framework and that is
NJ4X which enables me to interface with my existing Java
codebase into MT4 brokerages. (not intended to be advertising…)

This brought to my attention the PAMM offered by Tallinex for
MT4, and I also asked TradersWay. TradersWay also offers PAMM
for minimum $5k aggregate accounts (master plus investors equity)
so I wanted to suggest this be added as an additional feature.

I assume Tallinex’s arrangement will be similar.

PAMM allows a “money manager” or advanced trader to manage
others’ accounts with a POA (Power of Attorney) legal arrangement
so everything is nice and tidy. This may be “old news” to some
of you… but anyway.

As an MT4 newbie I am assuming most MetaTrader based outfits
will offer this same or similar MT4 PAMM feature.

Clint, you might consider putting this feature on the headline
post for these and other brokerages.

Hope this helps!
hyperscalper

3277

Our standard requirement is only $500 from the trader + $500 for each client (unless the trader has stipulated a higher minimum).

Please note that there are two types of PAMM system:

  • a fully-proportional system (as offered by Tallinex), which requires no special licensing/registration by US-resident traders because the minimum trade size for clients is 0.000001 lots, and

  • the more common type (where the minimum trade size for clients is 0.01 lots), and does fall foul of NFA rules for people trading on behalf of other US residents

Most larger brokers should offer some kind of PAMM/MAM facility, but fully-proportional PAMMs are the exception rather than the rule.

3278

That makes sense, what I don’t quite understand is why would they wanna do that to their residents, Is there even one good reason for it, or just plain arbitrary power trip.[/QUOTE]

It’s actually a larger issue of [I]currency control[/I]. All countries do this in one form or another to protect their interests. Just like you have a military to protect against physical borders, each country also has to protect their money. The problem with money is that it is interchangeable, especially at the cash level. But at the same time you have to do business with people outside your own borders, so it is inevitable that money must flow overseas anyway. Most of the wealth that developed countries have is [I]notional [/I]or [I]stated[/I], and they have to keep tabs on how much of the cash in circulating in their borders vs outside their borders. Japan started to do the same thing as they saw [the potential for] their residence to have large funds traded overseas, which can compete directly with their own economy. European guarantor for WebMoney also made some changes to limit the WME (EUR purses). Anti-money laundering is a common spook term for currency control in the majority of instances.

As a side issue, this is why bitcoin and other cryptocurrencies are so game-changing. Because it allows any [I][B]individuals[/B][/I] to [U]store[/U] and [U]move stored[/U] value quickly across distance (and countries/territories); and places the responsibility on the individuals that use it to self-police the system to maintain its integrity (e.g. hosting /monitoring the blockchain or ledger of transactions). The traditional banking system was always controlled by a few elite that did the fiscal/monetary policy on how the money would be used and then power trickled down from there. The trust rest with those elite few.

What you call money, and more specifically ‘your money’ is not really yours. The most recent example of this is the Greece debt crisis where the banks limited ATM withdrawals to 60 EUR/day and imposed other currency restrictions. The Greek residents found this out very quickly as did Cypriot, Argentinian, etc. not long ago. But that is an entirely different conversation that is beyond the scope of this thread. Not trying to piss anyone off here, but this was worth mentioning so people can understand why such AML controls are initiated in the first place.

3279

I’m still lost as to how you are doing this minimum trade size. How is the master or slave account able to trade units so small?