That’s what the broker has the disclaimer to be signed for. One can always say he/she found the broker’s number in Gibraltar’s phonebook and called the broker at that number.
Right - or one could say they heard of them from the book “The world is your Oyster” which lists brokers that accept U.S. clients.
(This book is mentioned at the bottom of Investors Europe - Offshore Stock Brokers Gibraltar online trading platforms FX Futures Stocks CFDs: U.S. Persons and I think that that is an indication that the can accept clients who list it as how they heard of them - they also mention “The Sovereign Investor” newsletter so I guess that is another acceptable way to hear about them)
I still prefer the “found in the phonebook” version - this by no means can be considered even as an indirect solicitation. 
Too bad all the forbidden brokers didn’t allow the same disclaimer, we wouldn’t be talking about it right now!
A word of caution - let’s see if this holds up after July 16th.
As of right now, even U.S. SEC-regulated broker-dealers will not be able to do forex after the 16th. This is up in the air until the last minute. Obviously some reprieve is going to happen, otherwise IB, TD Ameritade, etc. cannot do forex after July 16.
Dodd-Frank FX Deadline Costly to SEC Firms | Aite Group Blog
I am not sure that anyone knows what happens after July 16 regarding foreign broker-dealers relying on the non-solicitation exemption. It may be up in the air also, like the fate of U.S. stock brokers who also do forex.
Maybe the non-solicitation exemption still applies - I just do not know…
So as a US Resident, I am expected to “don’t ask don’t tell”…
Then to make matters worse…I must worry about my funds being safe…The sort of dealers that would accept my funds now have disclaimer forms!!!
The world of of Forex dealers has always been shady…now this CFTC thing…
No thanks…I quit (If I had more money to lose, I would use a US dealer like Oanda) Those of you entertaining the thought of continuing are just in denial…Get out of Spot Forex, Trading, Leveraging and Speculating! In this worldwide depression the only ones that will make any money are the dealers and the brokers IN ANY RETAIL INVESTING IN ANY MARKET…(the money grabbers got too greedy and we now know their tricks).
ElectricIsHetroSexualForexSavant
I think that investorseurope has had that non-solicitation disclaimer for a while - maybe for years. It is not necessarily a sign of any weakness. No less a major player than MF Global has had such a form for decades to allow Canadians to invest in its U.S. brokerage despite Canadian laws forbidding solicitation of its residents from outside Canada:
The CFTC regulations prohibit foreign brokers from soliciting US customers, but not from servicing them. As long as the non-solicitation disclaimer is signed by a customer, there’s nothing the US CFTC can demand from a foreign broker.
ElectricSavant,
I appreciate your many contributions to this thread. And I share your outrage at the abuses perpetrated by the CFTC.
But, I disagree with almost everything you said in your last post.
Taking your rant from the top:
This is not a case of don’t-ask-don’t-tell.
If fact, a U.S. resident who trades with a foreign broker is advised to report his/her offshore forex account to the IRS on the FBAR form, and report all profits earned on his/her tax return. Having an offshore account is not illegal. Earning profit in that account is not illegal. Failing to report those facts as required IS illegal, and stupid.
Furthermore, a U.S. resident who has an offshore forex account is perfectly free to advertise that fact to the world — through an online forum, for example.
The only aspect of this CFTC-created charade that involves “don’t tell” is the website issue. Many of us believe that the Commissars at the CFTC have violated the Constitution, have violated common law, and have violated common sense in their assault on the internet. For us, any act of civil disobedience which successfully circumvents the CFTC is a good thing — it’s something to be talked about, and encouraged, and celebrated in forums such as this one.
Regarding “worrying”, I think it would be more accurate to say that you ALWAYS should take sensible precautions and exercise due diligence in your evaluation and selection of ANY financial instrument, bank, broker, or advisor. There is extra due diligence required in the case of a FOREIGN instrument, bank, broker, or advisor, because regulations differ from country to country, and because dispute resolution can be more difficult if the disputing parties are on opposite sides of the world. But, this has nothing to do with the obstacles which the CFTC is placing in the path of U.S. residents who want to exercise their right to do business with a foreign broker.
In the “wild west” days of retail forex, it made sense to view ALL forex brokers with great suspicion. Due diligence in those days basically amounted to assuming a prospective broker was guilty until proven innocent. I’ve been around this business long enough to remember Refco and a few other sleazy operators from several years back. To their great credit, the CFTC cleaned up the U.S. retail forex brokerage scene — which is entirely within their mandate. But, after that great success, the CFTC began to run amok.
To say that “the world of forex has always been shady” is to deny the great progress which has been made in cleaning up this industry — thanks to the CFTC.
Regarding your apparent decision to walk away from forex trading, that may be a valid decision based on your personal circumstances. But, it isn’t a rational response to the problems currently being created by the CFTC.
Hundreds of thousands of U.S. residents trade retail forex through U.S. forex brokers, and seem to cope with the abuses perpetrated by the CFTC. You could certainly be one of them. You could — if you choose to — simply ignore the war that we are waging against the CFTC over the issue of offshore brokers. You could open that Oanda account you mentioned, and focus all your attention on learning to trade profitably.
If the war that we are waging against the CFTC over the issue of offshore brokers is so upsetting to you, then walk away from the conflict. But, don’t walk away from forex trading — not if you know how to do it successfully.
Well if that is true, and I understood you correctly, then why is there a problem? All we need to do is have some of our most well spoken, best communicative people on this forum, contact these brokers and their legal departments, and have them draft up a non-solicitation disclaimer agreement. Again, if I understood you correctly.
Only in tax havens are the brokers going to have legal departments (or outside lawyers on retainer) with the sophistication needed to assess such a complex issue and take a possibly aggressive stand on it.
Gibralter is a tax haven so this broker is prepared to pay a lot of legal expenses to be able to accept clients from all over the world with complicated regulatory issues. You can see that from the fact that this broker has arrangements to set up nominees free of charge and to help set up trading corporations etc. How many other brokers have that degree of expertise?
Most other brokers would probably do this only if they can get an explicit ruling from the U.S. regulators that it is ok. They will probably try to get that but it may take years. On the other hand, the absence of such a ruling does not mean that it is not O.K.
Some other foreign brokers may already be doing something similar but may be selective about which customers it is offered to. I agree that it would be worthwhile if someone would call the compliance departments of some of the larger foreign brokers such as Dukascopy, ACM and Tadawul and see if they can make any exceptions.
All of that said, I myself am not sure that we know the whole story on this yet. July 16 has not even come and gone yet.
The July issue of [I][B]Futures Magazine[/B][/I] has an article titled, “Dodd-Frank: Why the hold-up?”
Dodd-Frank: Why the holdup? - Regulations - Futures Magazine
If you read that article word-for-word, one thing will jump out at you: There isn’t one mention of forex in the entire article. The reason is simple: [B]Dodd-Frank is not about forex.[/B]
We — our market and our right to trade where and with whom we choose — are simply Dodd-Frank collateral damage.
This article will make your eyes glaze over, unless for some reason you’re just fascinated by the derivatives market. But, a couple of short paragraphs are worth mentioning here.
“For as long as there have been OTC derivatives, there have been exchange executives calling for their regulation. Dodd-Frank answered that call, but it’s not the answer many initially believed it to be.”
That’s probably the briefest description you will ever see of what Dodd-Frank is all about. It’s about command and control in the over-the-counter derivatives market — a market (second in size only to the forex market) which careened out of control in 2008-2009, and threatened to topple the economy of the world.
Those “exchange executives” mentioned in the paragraph above see dollar-signs when they think about getting control of the $600 TRILLION per year OTC derivatives market. If (when) they, and the CFTC, and the SEC, and Dodd, and Frank succeed in forcing that market onto a commodity-futures-style exchange, can retail forex be far behind?
The second paragraph of note in the [I][B]Futures Magazine[/B][/I] article is this one:
“The big banks, however, are far from alone in holding up the implementation of Dodd-Frank. Even exchanges and clearinghouses — which stand to win big as business migrates to their platforms — fear a shift from principles-based regulation to rules-based regulation at the CFTC. Others warn that we risk running out of synch with the European Union, which is at least a year behind the U.S. regulation (see “Europeans move at their own speed”). [B]Asian regulators — most notably in Hong Kong and Singapore — have talked of creating friendlier regulatory environments, prompting House Financial Services Committee Chairman Spencer Bachus to warn that we’d only be sending business overseas by implementing a strong regulatory regime.”[/B]
(I put that one sentence in bold type, for emphasis.)
There is a second mention of Hong Kong and Singapore in the sidebar item titled, “Europeans move at their own speed”:
“While not mentioning Asian regulators by name, he [U.S. Treasury Secretary Timothy Geithner] clearly was targeting [B]Hong Kong and Singapore — both of which aim to become OTC derivatives hubs.[/B] European regulators agreed with Geithner’s call for the creation of a global standard, but objected to his veiled implication that the United States was moving forward while others were lagging. The grumbling was prevalent enough for Futures and Options Association (FOA) Chief Executive Anthony Belchambers to issue a call for more productive rhetoric.”
(Again, the bold type is my doing.)
Maybe we should search harder to find large, well-capitalized, well-regulated forex brokers in Hong Kong and Singapore. If their governments and their regulators are interested in attracting OTC derivatives business, and in becoming major players in that market, maybe they are interested, as well, in attracting U.S. retail forex business.
I’m thinking out loud here. I hope that other participants on this thread will chime in.
I would wholeheartedly support that course of action. So far, Investors Europe was the first known broker to take this path (and therefore, take over a substantial chunk of the retail Forex market). I hope others will soon follow suit. If not, they will simply lose their business to Investors Europe - the slow and the dull always lose to the fast and the prudent.
Do you folks really want to take a chance with your your hard earned money? I’ll be damned if I do. There are not any good investments left…and just forget leverage under any label…
We are in a new era.
Anyways…post a reply to this next year…Good luck and all the best…
ES
Have you ever heard of anyone being scammed by Investors Europe?
PROHIBITED COUNTER PARTIES…This is a wide open interpretation for the authorities to use…
bottom-line: I wouldn’t feel comfortable opening an account overseas (I am not a rebel or in denial)
Traders please be careful…some of you have known me for years and I have never intentionally tried to misguide you. I have no agenda other than to help my friends with my posts (I consider all traders my friends). I think you will be taking an unreasonable chance to send your money far away to an overseas account against the wishes of your government.
Opening up entities will cost you 2K…and some famous trading CPA’s (Green) state that it is not even enough to skirt the rules…
ES
“Foreign banks, many of which offer Forex platforms to U.S. investors, will be [B]prohibited counter-parties[/B] because of language in Dodd-Frank Section 742. However, this provision does not become effective until July 16, 2011. While Congress did not leave room for bank regulators to make rules that would allow foreign banks to intermediate Forex transactions for U.S. retail investors after July 2011, these foreign banks are still outside of the CFTC’s jurisdiction and thus unaffected by the CFTC’s final regulations on OTC retail Forex. Therefore, a U.S.
retail trader could continue to trade Forex through a foreign bank, with no leverage or hedging restrictions, until July 16, 2011 without running afoul of any of the new rules that have received so much attention.”
This hasn’t been news for almost a year already. That’s why foreign brokers that are also banks (such as Dukascopy, MIG Bank etc) are now closing US accounts and refunding their US customers in anticipation of July 16. Yet this is not something I am particularly concerned about, since not all foreign brokers are banks - as a matter of fact, most of them are not.
I am not trying to persuade you to open a trading account overseas. Everyone is free to make their own choices.
Just please be careful…I had a late-edit to my post above.
Good Trading to you.
ES
I understand your concerns. The CPA Green you’ve mentioned admits he has no certainty as to how one should interpret the US CFTC regulations. What I really can’t imagine is a US retail Forex client being busted by the US CFTC for having an overseas trading account if he/she was not solicited by a foreign non-bank broker (of which he/she has a proper non-solicitation disclaimer signed with the broker) and has duly paid his/her taxes on his/her trading profits to the US government.
I am not prepared to test the theory…
I am finished.
ES