Going offshore to escape the CFTC

kneal · October 9, 2010, 11:25am

I’m new to Forex and frankly I’m a little confused about it all…
Does anyone have any experience with this broker?

DaTrader · October 9, 2010, 1:26pm

Clint:

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.

[B]I just wanted to say Thanks for the great thread and the effort that you are putting in to contacting all the brokers. it’s nice to have all this info in one place![/B]

Supernova · October 9, 2010, 6:00pm

I’m surprised that no one has mentioned IBFX Australia or are they not accepting US residents or limiting them them to 50:1? Been trading since mid September with them on a 200:1 Account. They are licensed with the ASIC (Australian Securities and Investments Commission) so everything looks fine.

www.IBFX.com.au

sandpipper · October 9, 2010, 8:11pm

russian bucketshop with very low spreads.

prob could care less about the cftc or nfa, but i’d be wary. IMHO

alamoland · October 9, 2010, 9:20pm

I received an E-Mail from my broker yesterday telling me they would be closing my account as of the 18th due to CTFC rules. My broker is GO Markets in Australia. If I could attach the E-Mail I would, but I don’t see any way. At any rate, to paraphrase what they have said: Although we are controlled by ASIC here in Australia there is a ‘memorandum of understanding’ between ASIC and the CFTC that prohibits us from servicing US citizens any longer. (I’m so P*sed I can hardly type!). They go on to say there are certain exceptions. If I’m residing in the US, but not a citizen, then I’m OK. If I have $10,000,000 or more in my account, then I’m OK! There are others, but I can’t remember them offhand. I didn’t qualify for any of them.
I left IamFX in March to avoid this BS. A broker I was happy with, which by the way, I think went out of business the other day, or perhaps is moving to Panama, I’m not sure. I am sure it’s related to this CFTC crap. You know, as do I, Forex is hard enough without the Fing government ‘helping’.
If this seems incoherent, please pardon me. The election is soon, and we have to get these imbeciles fired!
Really frosted,

tom82 · October 10, 2010, 6:39am

A website that has come to my attention is Forex Ratings - Forex Broker Rating. Top Rated Forex Brokers Forex Ratings.
May be of interest when it comes to researching for brokers.

alamoland · October 10, 2010, 11:21am

Thanks tom,
I’ll take a look…Sorry about the rant.

tom82 · October 10, 2010, 3:32pm

alamoland,
No worries.
I understand it is very frustrating times for all involved that these new rules affect.

Clint · October 11, 2010, 12:47am

Late Sunday afternoon, I sent emails to five Australian forex brokers and two New Zealand brokers, inquiring whether they are currently opening new accounts for U.S. residents. (Sunday afternoon EDT was Monday morning in Australia and New Zealand.)

Australian brokers emailed Sunday, October 10

Axi Trader — Forex Trading | Forex Broker | Forex Brokers | Forex Trading Platform

Forex CT — ForexCT Forex Trading

Halifax Investment Services Ltd — Foreign Exchange FX - Stock brokers for FX Foreign Exchange - Halifax Investment Services

IG Markets — Forex Trading | Forex Online | Trading Currency

Vantage FX — Online Forex Trading And MetaTrader 4 Brokers - Vantage FX

New Zealand brokers emailed Sunday, October 10

Latitude FX — Trade foreign exchange online - Live currency trading

WSD — WSD Global Markets Ltd : The online trading provider matching highest standards in integrity and safety

Five of these brokers are being contacted for the second time. I first emailed them on October 4, and they have not replied yet.

Two brokers, [B]Forex CT[/B] and [B]Vantage FX[/B], are new additions to our list of prospects.

Later this morning, I will send follow-up emails to U.K., German and Swiss brokers.

Clint · October 11, 2010, 1:52am

Axi Trader (Australia) is no longer a prospect. I just received this reply:

tom82 · October 11, 2010, 2:23am

Hi Clint,

You are doing a great job.
How did you get on with my suggestion of Got Money fx, they are based in Brisbane Australia I think?
IIRC I added their url to one of my previous messages.

millerja01a · October 11, 2010, 2:30am

I was with an ASIC broker and they will be closing my account of Oct 18th.

Chatted with TadawulFX agent and they will take US traders at 500:1. As soon as my funds arrive from my now former Aussie broker, I’m going to Tadawul.

Will post experiences when I can.

tom82 · October 11, 2010, 4:05am

Another Swiss broker has come to my attention, ie Forex.ch part of GFX group.
Their address is FOREX.CH

dragofx · October 11, 2010, 9:04am

I just contact forex.ch their live chat operator was unable to answer the question. They are supposed to be emailing me shortly.

Is the ASIC going to be completely impacted or was the comment made by gomarkets exclusive to them?

As much as I would like to remain in one of the major financial sectors, I am going to begin looking at brokers in less traditional markets.

dragofx · October 11, 2010, 9:18am

clint, I just asked ONE financial again. They definitively told me that they will face fines from the nfa if they accept us clients to trade.

I was told this by Andy Cottrill: a rep at ONE financial. If you are getting different answers please let me know.

dragofx · October 11, 2010, 9:30am

ForexCT seems like a definite addition to the list. It also seems as though the distinction the ASIC is making is with solicitation of US clients. Here is the answer from forex FOREXCT.

Forex Capital Trading Ltd does not approach customers based in the United States of America. Forex Capital Trading Ltd and its subsidiaries do not have offices in the United States of America and are not regulated by any authorities in the United States of America. However, if you decide to engage our services by registering on our website, then you accept the terms and conditions of the website which are binding in their entirety.

jcgibson · October 11, 2010, 11:25am

I tried to open a demo with this broker but there is no listing for USA on Country

tom82 · October 11, 2010, 1:31pm

I’m sorry to hear /read that

dragofx · October 11, 2010, 4:56pm

will definitely not be accepting US clients after the 18th

bravehoststamps · October 11, 2010, 5:01pm

The following brokers have confirmed in their responses to my inquiries that they will continue servicing and accepting US customers after October 18, 2010 without leverage restrictions: FXOpen, Tadawul FX, Marketiva, InstaForex, E-Global, 4XP, Forex4You.