Going offshore to escape the CFTC

[fxsurgeon]

Just received an email from Saxo Bank, stating my account will be terminated due to US regulations by July 15th.
Another one bites the dust.

[Clint]

…Saxo Bank…bites the dust.

I’m sorry to see Saxo Bank cave in to the Commodity Futures Trading Gestapo.

If anyone has additional information on Saxo’s decision, please post it here.

Barring any new info to the contrary, I will remove Saxo from our List later today, or this evening.

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EDIT:

Saxo Bank has been removed from the List.

For now (until the List is moved again), you can find the List by scrolling back to posts #726, #727 and #728.

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[InvestorX]

Clint,

Was about to open an account with Kinetic Securities and was minutes from sending all my notarized forms when I received an email stating the following:

Unfortunately we are unable to open a MetaTrader 4 account for US residents.

Please do not hesitate to contact us on 61 2 9295 9800 or simply reply to this email if you have any further questions or concerns.

Kind Regards,

Kristy-Lee Slater
Customer Service
Kinetic Securities
P: (02) 9295 9800 | F: (02) 9295 9890

It’s a shame too because I have been demoing with this broker for quite some time and their spreads and platform are very good. Remove them from the list.

[Clint]

Was about to open an account with Kinetic Securities…when I received an email stating the following:

[B] Unfortunately we are unable to open a MetaTrader 4 account for US residents.[/B]

Remove them from the list.

InvestorX,

Thanks for the info.

Kinetic Securities came highly recommended by a former member of this Forum. I’m sorry to see them knuckle under to the CFTC. They are the second Australian broker to cave — just this week.

I will remove them from the list of “good guys” later today.

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EDIT: The List has been updated.

[Trader4Life]

Just saw this article as the top story in the Business section of Google News: The Pros and Cons of Trading Forex in an Overseas Account

The Dodd-Frank Wall Street Reform and Consumer Protection Act was passed on July 15, 2010, and introduced some changes to the way retail investors participate in the foreign exchange market. The majority of these changes went into effect in October 2010. However, as with all sweeping legislation, there are many gray areas within the act that require some interpretation by forex market participants. The way the market interprets the act will impact whether it is beneficial to open a forex account overseas. Here we’ll examine what forex traders now need to consider when looking to trade forex from overseas accounts. . . .

It’s a decent enough article, written by Kristina Zucchi of Investopedia, although it seems to completely gloss over the fact that many overseas brokers are shutting their doors to US customers because of the adverse regulations and that more are dropping by the day as we approach the July crackdown. Still, it’s good that the news media is picking up on the story even if in limited form.

[comintel]

From the article:

“Another benefit to having a foreign account is the potential tax benefit. Although forex trading is tax deferred, gains are taxed at the capital rate when funds are withdrawn. A foreign account essentially removes any tax requirements, although the IRS may require that U.S. citizens repatriate funds at some point.”

I believe that this is completely incorrect.

U.S. citizens and residents are taxed on their world income. There is nothing that exempts accounts held abroad. As a matter of fact, numerous people have been prosecuted criminally for failure to report such income (e.g. in the UBS case,)

There is also no provision in law which would allow the IRS to require repatriation of funds at any time.

I will email the author…

[Trader4Life]

Yeah, she got the tax angle very wrong. Still, I’m appreciative that she got exposure for the issue in major media.

[EmptyEternity]

How bout overdue Student Loans!! lol

[Trader4Life]

Another new article, this time from Forbes on the FBAR requirement, with a lot of Forex foreign broker specifics: Handling New IRS Requirements Without Doing Jail Time

[Clint]

Another new article, this time from Forbes on the FBAR requirement, with a lot of Forex foreign broker specifics…

Excellent article, T4L. Thanks for posting it.

.

[wiseman]

try RFXT they have good spreads RFXT: Royal Forex Trading - Clear-Cut Trading

[EmptyEternity]

Has anyone ever heard of ECNFXTrader? Takes US, overseas NZ, supposedly regulated (by what?), and max leverage. I don’t like that they have mt4, but I can’t find one bad thing about them. Any help?

[Clint]

Do you mean [B]ECNTradeFX[/B] — full name: ECN Trade Capital Markets Ltd (NZ) —

Online CFD and Forex ECN STP NDD Broker

I went to their website, and from their homepage I clicked on the tab labeled “About Company”. That brought up a 404-error message, which is not exactly confidence-inspiring.

Otherwise, they look promising. Anyone else have info to add, here?

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By the way, why do you think eternity is empty?

If you feel like answering that question, you probably should do it in the Melting Pot forum.

[EmptyEternity]

Do you mean [B]ECNTradeFX[/B] — full name: ECN Trade Capital Markets Ltd (NZ) —

Online CFD and Forex ECN STP NDD Broker

I went to their website, and from their homepage I clicked on the tab labeled “About Company”. That brought up a 404-error message, which is not exactly confidence-inspiring.

Otherwise, they look promising. Anyone else have info to add, here?

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By the way, why do you think eternity is empty?

If you feel like answering that question, you probably should do it in the Melting Pot forum.

Not defending them, but I was able to see their About company page…

[jonnyrich007]

CitiFX Pro is definitely a worth a look if you can meet their $10,000 opening requirement since they are not bound by NFA and CFTCA. Also your funds are safer. They are regulated by OCC and Federal Reserve. FIFO and no-hedge do not apply. Clearly pointing out that NFA is our biggest pain in our butts. I will be switching completely to CitiFX Pro as soon as I can. Leverage is still 50-1 unfortunately. Spreads are ECN like, market executions not instant execution and no commissions and 130 pairs offered.

[Jona]

Does anybody here have real experience with CitiFX? If yes, please, share.

[sandpipper]

Ok I can see that some excellent discussion has taken place since the last time I have looked at this thread a month or so ago.

I am sad to say that Dukaskcopy is doing the tail tuck and rolling over to the CFTC. Hopefully this is not a double post, I have not been able to read all the pages since last time.

Dear Client,

As you may know, the regulatory environment of Forex trading has recently been subject to important changes in the United States. Dukascopy Bank SA will adapt itself to this new regulatory environment effective July 16, 2011.

“Eligible contract participants” as defined in the relevant US regulation (United States Code: Title 7,1a. Definitions | LII / Legal Information Institute) will remain our clients and continue to trade with us on the Swiss Forex Marketplace. If you are an eligible contract participant, please inform us.

Clients who are not eligible contract participants are welcome to continue trading on Dukascopy Bank SA’s trading system through one of our US partners. Our US partners will provide our trading technology and data feed to US clients.

A simple procedure will ensure a fast and easy transfer of your account to a US partner. Please note: All positions opened with Dukascopy Bank SA by non-eligible contract participants must be closed by July 15, 2011 at 18:00 GMT (July 14 at 18:00 GMT for non-USD accounts).

You will receive further information and guidance on July 1, 2011.

Please do not hesitate to contact your Relationship Manager at Dukascopy Bank SA should you have any questions.

All the best

Dukascopy Bank SA

[sandpipper]

Well, do we all agree that the best policy is to go off shore completely and start an IBC or trust off shore? I had posted that a few months back and it seemed that most people thought that it was a somewhat radical idea back then, is it different now?

For now, I stand by my earlier recommendation, why take a chance, get an off shore business or family trust and do it legal.
Bob

Hello Bob,

I picked up on your recommendation a few months ago. Do you think you could bop over to the thread I started to “attempt” to discuss this and give us some insight on how to go about this?

Here is the link.

http://forums.babypips.com/rate-my-broker/38635-handwriting-wall-how-where-set-up-offshore-business.html

Thanks
Tim

[Clint]

I am sad to say that Dukascopy is doing the tail tuck and rolling over to the CFTC.

Hello, Tim

I’m sad to see Dukascopy cave in, as well.

The CFTC is using thug tactics around the world, in order to get their way. That little dictator Gensler at the CFTC needs a good butt-whipping.

Later tonight I’ll move Dukascopy to the “chicken list”.

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For now, when I post updates to the List, instead of deleting the previous red updates, I’m going to let them accumulate. That way, we can see at a glance the losses we’ve taken over the past few months.

[Trader4Life]

Dukascopy was a major loss. I thought they would hold on and be among the last to buckle, but I was wrong.

So does anyone still believe there is any reason to be hopeful on this topic anymore, or are the rest of the brokers going to abandon US soon enough so that everyone ends up being on the No List?