Going offshore to escape the CFTC

Broker Discussion Forex Brokers
733

thes521 it’s funny that you mention Tadaulfx because I was just looking at their site and starting to really consider opening an account with them. It seems like a really polished, professional broker. They do have posted that US customers can’t take advantage of their recently CFD trading because of “US rules and regulations,” so they do choose to enforce some US restrictions on US customers. However nothing indicates that they plan to enforce the stupidity that is the latest CFTC dictates. (I’d love to know why Tadaulfx chooses to enforce some US regulations but not others.)

On another point I came across this recent article (from last month) by FXStreet’s founder, an update that claims that none of the 14 firms sued by the CFTC have responded in court except for one that promised to cease and desist if the suit got dropped. I had hoped that at least one company would fight back, but it looks like they’re all going to get summary judgments placed against them. It makes sense for a foreign company not to respond since they don’t recognize US jurisdiction, but I was hoping for more. This founder of FXStreet, Francesc Riverola, stupidly cheers on the CFTC’s financial dictatorship; of course it’s not too difficult to see why - FXStreet is obviously in bed with the domestic Forex brokers who didn’t fight back for trader freedom in the US and instead went along with the corrupt bargain that tried to make them the only game in town. In a previous article on the subject he blindly went along with the wire service’s headline that claimed the CFTC was going after these firms because of “fraud.” Shameful.

That previous article, however, made another point that I think is worth consideration. It claims that the CFTC went after firms that were not only unregistered with the CFTC but that were also “illegally soliciting” members of the US public to engage in Forex trading. As I think others have pointed out, it may be that as long as foreign brokers aren’t actively soliciting US customers by advertising open acceptance of US customers, the CFTC may not be able to touch them. The CFTC may be hoping that by suing that initial 14 it could scare foreign firms into not doing business with US customers (and some did respond to the scare tactic), but it may not have any ammo passed that. It’s an arguable, unsafe assumption, but I think that if the CFTC thought it could have done so, it would have gone after more than 14 (and remember, IIRC, not all 14 targeted were actually brokers - a number of them were introducing broker affiliated outfits). We’ll have to see how the dust settles in the coming months and years, but I think this may be the loophole that keeps our options open.

734

Hi All.

Has anyone had any experience with Australian brokers using the ECN/DMA model? I just got an MT4 demo and looking for some tight spreads. I know international traders can use some Australian brokers with great success - especially with MT4 because there is no dealing desk.

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735

It’s not the dealing desk or lack there of, that makes Australian brokers attractive to traders, it’s because they offer accounts in Australian dollars. The same could be said about Canadian brokers if there were any. With the wacky financial affairs of the world these days, you not only have to find a good system that makes money regularly but also stay aware of how strong your account currency is. If your account currency is getting weaker then you can be losing real value while showing a profit on the account. Both Canadian and Australian dollars are pretty stable, that why a lot of traders tend to go there.

736

By the way, does anyone know of a good Canadian broker that they would like to recommend?

737

Makes sense. Thanks. Guess I need to find a good Australian broker. Any suggestions?

738

Well, for non US traders, IBFX is in Australia now. I’ve worked with Tod in the past and he ran a very tight ship. But they don’t take US clients. Our IB is with Go Markets so we obviously like them but same problem there too. But this limitation is exactly why we have decided to encourage our members to consider an off shore entity to work through. If there is a benefit to using a particular broker, I don’t want to be discriminated against just because I come from a place with a truly stupid government.

739

Well said…I think this is bringing on a new thread.

740

I have been trading with the Australian broker [B]Forex FS[/B] for the past two months.

Customer support has been outstanding. Their MT4 platform has performed well, no unexplained spikes or requotes. Pip spreads are average, swap rates seem high. Hedging permitted, no FIFO, .01 beginning lot size (micro lots), ASIC regulated and 1:200 leverage.

They accept U.S. clients.

741

Does any body else have any back ground on any Ausie Brokers accepting US clients??

742

Forex FS and Vantage FX do so, all others don’t. That’s about as much as I know.

743

Any clue on why some brokers still accept US client while others don’t?

744

The reason being the US CFTC has failed to provide a complete clarification on their new policies - in particular, whether an offshore broker doing absolutely no business on the US soil is allowed under the US law to accept and service US customers in a place of its overseas domicile.

745

All the US brokers are ban in my book, and I think that is the only way to hear from us the traders.

746

I opened a small live account at FinFX. I am impressed with their Integral liquidity. Finally an ECN using top notch liquidity solution.

747

A paste from my email:

Dear Aaron,

I attempted to contact you today regarding upcoming changes to your dbFX trading account. Beginning Friday, May 13, 2011, Deutsche Bank will no longer be providing dbFX, its foreign exchange trading product and has made arrangements that will allow you to move your account to FOREX.com.

Bummer…

748

That comes as a complete surprise to me. Deutsche Bank has always had a special place in my heart.

I checked their website and found the same thing that you quoted.

Here’s the link — Forex Trading | Online Currency Trading Rates | FX Research | dbFX

Obviously, dbFX must now be removed from our list of Offshore Brokers who welcome U.S. clients.

Unfortunately, Forex.com, which is part of Gain Capital (a U.S. domiciled corporation) does not qualify as an Offshore Broker, and cannot replace dbFX on our list.

I will remove dbFX from the List, and (once again) move the entire 3-page list to the end of this thread, where it can be found more easily.

752

Please explain how some brokers do allow US traders?

753

From what I’ve heard they (Deutsche Bank) are not rendering dbFX anymore because of their current strategies.
I haven’t heard what these “strategies” are, but I was really hoping that dbFX was also part of these strategies.
Phasing out dbFX is really a sad thing for account holders.

And yes, I do agree that Forex.com cannot replace dbFX.

754

Clint & Others,

Great thread all, I have been following it for some time now. I recently have been researching brokers to open an account with as I am now ready to start trading live. I am a US resident and was interested in opening a foreign account and I really could use some advice from you. I have seen in previous posts recommending opening an account in Australia or Canada due to the stable currencies. For instance, if I open an account in Australia, would that mean converting my USD to AUD and then keeping my account in AUD to take advantage of the stable currency? If so, how do you get your money into AUD and how does that effect withdrawing money out of your account? Again, I am relatively new to researching brokers but I apologize if I am asking any obvious questions but I really could use any help you could offer or direction. Thanks.

755

Yes, in order to take advantage of the strong AUD, you would want your Australian account denominated in AUD.

Converting currencies is no problem for forex brokers — [B]that’s the business they’re in.[/B] In the typical case, you would transfer USD to your Australian broker, with instructions to convert it into AUD at the current rate (minus whatever service charge is associated with this conversion).

From that point forward, your account would be denominated in AUD; your P/L would be reported in AUD; and you would have to become accustomed to figuring pip-values in AUD.

Otherwise, trading is trading; and whatever methods and strategies worked for you in a USD-denominated account would work exactly the same in an AUD-denominated account.

As part of your due-diligence, and before you send money, you should discuss these things (by chat, by email or by phone) with the broker you have chosen. Make sure you understand completely the broker’s policies, procedures, fees and miscellaneous charges (if any). Make sure there are no nasty surprises AFTER they have your money. Specifically, you should understand ahead of time the various ways that you can fund your account, how conversion from USD to AUD will be handled (including fees), the way (or ways) that you can withdraw money from your account, and how conversion from AUD back into USD will be handled (including fees).

Note that opening a live account is typically a 2-step process. First, you apply for a live trading account, and get approved. Second, you fund your account (send money).

Your due-diligence should be done in 2 steps as well. Before you waste your time applying for an account that may not be right for you, check out the broker’s reputation, regulation, account types, minimum amount to open an account, pairs offered, spreads, platform, terms and conditions, etc, etc.

After you have selected a broker which meets your basic requirements, open an account with them. Then, before you actually fund your account, double-check all the nitty-gritty details, like fees to convert funds, time required to receive your money after requesting withdrawal, roll-over rates and time of day when roll-overs occur, etc., etc. In other words, try to find all the surprises, before you send money.

One final word: In order to open a live trading account, you will be required to sign an agreement which spells out all the terms and conditions of your relationship with your broker. This agreement will have been written by the broker’s attorneys, to protect the broker every which-way, to give the broker all the options and all the power in this relationship, and basically to put you in the position of “take it or leave it”. The agreement might run to 20 or 30 pages of lawyer-speak, and after you’ve read it (and you should definitely read it, before you sign it), you’ll want to barf. There’s no way out of this predicament, if you want to have a live trading account. So, just hold your nose, and sign the wretched thing.