Going offshore to escape the CFTC

Broker Discussion Forex Brokers
1106

Hi bravehoststamps,

Last year, there was an 11 day delay in repatriating US residents from FXCM UK back to FXCM US. The CFTC required the repatriation to be completed by October 18, 2010; however, at the same time, the Financial Services Authority (FSA), FXCM UK’s regulator, required individual consent from each account holder before FXCM UK could initiate a transfer. In seeking to comply with the FSA requirement and prevent disruption to clients’ open positions, FXCM UK missed the CFTC’s deadline for completing the process as it sought to properly notify affected clients and conduct transfers in a timely and orderly fashion.

We regret the brief 11 day non-compliance in repatriating US residents, but the delay meant that the impact on our clients trades was minimized (as opposed to forcefully closing trades and being in non-compliance with UK regulations) and ensured a smooth transition of accounts from FXCM UK to FXCM US.

Our full statement can be found here http://ir.fxcm.com/phoenix.zhtml?c=2...217&highlight= . Please feel free to let me know if you have any questions.

-Jason

1107

Thank you for the clarification. Would the US CFTC be able to do anything to FXCM if there was no FXCM US and no other business presence of FXCM in the US of any sort whatsoever?

1108

My understanding is that the CFTC intends to go after brokers not regulated with the NFA/CFTC but still accepting US residents even if the broker does not have a presence in the US. The CFTC has cooperative enforcement arrangements with multiple jurisdictions around the world, so this leads me to believe they could. We’ll just have to wait and see an actual scenario pans out for a definitive answer :slight_smile: . I’ve noticed from the forums that many brokers have chosen not to take that risk.

1109

This is so despicable. FXCM UK did absolutely nothing wrong. It’s big offense was good servicing American customers. Someone please tell me FXCM will appeal this judgment, please.

The CFTC is completely out of control and has become dictatorial in its unjust prosecutions and abridgment of the rights of American customers. I am sick over this travesty.

1110

The CFTC will continue enjoying themselves and their practices as long as they are not duly challenged by foreign brokerages in a court of law. Provided how submissive the brokerages are, the status quo will in all likelihood remain intact.

1111

Does anyone know where one might find a list of jurisdictions the CFTC has ‘cooperative enforcement agreements’ with?

1112

See Memoranda of Understanding - CFTC

However such agreements would not necessarily allow the CFTC to extend its jurisdiction beyond the scope agreed upon.

The other authorities would have room to assert sovereignty concerns in many cases, I believe. They do not have to enforce CFTC rules that intrude on their own jurisdiction. This may vary though.

1113

Thanks for your quick response! Think I’ll simplify things and only choose from brokers in countries that are not mentioned…

1114

That may or may not be a workable plan.

Let’s compare the countries listed on the CFTC webpage that [B][I]comintel[/I][/B] linked to, with the countries represented on our List of offshore brokers.

If you decide [B]not[/B] to consider any offshore broker domiciled in a country listed on that CFTC webpage, then you are left with brokers in: Finland, Bulgaria, Gibraltar, Cyprus, Kuwait, Mauritius, Seychelles, Panama, Belize, British Virgin Islands, and Dominica.

But, look at the last category mentioned on the CFTC webpage — Multilateral Arrangements and Other Cooperation. This category refers to something called the IOSCO Memorandum of Understanding (MOU), and contains a long list of “signatories”. At first glance, this list doesn’t remove any more countries from our List of offshore brokers.

But, when you track down the “IOSCO Library” here —IOSCO Library Section — you find there are two lists of countries, including: Finland, Bulgaria, Gibraltar, Cyprus, Panama, British Virgin Islands, and Dominica. If you decide not to consider an offshore broker domiciled in any of [B]these[/B] countries, you are now left with brokers in: Kuwait, Mauritius, Seychelles, and Belize — not exactly the “cream of the crop”, in my opinion.

I think we might want to keep these CFTC and IOSCO lists in mind, but [B]not[/B] use them to [B]automatically[/B] eliminate any offshore broker from consideration. If you have a serious interest in a particular offshore broker whose country of domicile appears on one of these lists, I think it makes sense to have a candid discussion with the broker about this issue.

The CFTC is in uncharted territory with their current attempts to establish themselves as the World Regulatory Authority, and to force the nations of the world to accept, abide by, and enforce every rule and regulation dreamed up by the CFTC.

At some point, a major push-back is going to occur, and I sincerely hope that some of the premiere brokers on our List of offshore brokers will lead that push-back.

The CFTC is an arrogant and pompous bureaucracy, led by a little tin-horn dictator who is full of himself.
I don’t expect this bureaucracy, or its leader, to survive in their present form.

1115

There is an official version, and there are facts. The facts are that many Africans move by people who were paid for. It’s like the Mexican border. Just a little worse.

I also do not have contact with the mediator, why not look at other brokers. I’m sending stuff here to share my experience and help others to make decisions themselves.

1116

What makes you think so, Clint? All major foreign brokers turned out to be submissive as one can be.

1117

Anyway, let us not give up. Cyprus-based Traders Trust (traders-trust.com), Latvia-based Renesource Capital (renesource.com), Switzerland-based Universal FX (universal-fx.com), BVI-based PaxForex (paxforex.com) and Loyal Forex (loyalforex.com) as well as Panama-based PipFixed (pipfixed.com) have all replied to me they continue accepting and servicing US customers. So it looks like it’s time to update our list again. :slight_smile:

1118

Another possible clarification on the list: FinFX website states that for their US customers - the margin rate is 1:50. Don’t know if others are doing that, also. Could that be part of the ‘understanding’ with all foreign brokers - to be allowed to accept US residents, they must apply (some\all) CFTC rules?

1119

Where do they state it?

1121

Glad you asked. From now on, I’ll send verification. I contacted FinFX and was told every trader is given a leverage percentage range to choose from according to the account type. I just checked the other site I had looked at, and found the 50:1 margin notice for US residents on the Investors Europe’s site. Investors Europe :: USA Clients :: Forex, CFD | 24 Hour Market

1122

If that is the case, it makes abolutely no sense for a US customer to open an offshore trading account with Investors Europe - better stick to MBTrading or Oanda which offer the same leverage and even tighter spreads while being US-based. I am currently with MBTrading and can say only good things about them.

Good to know the American customers of FinFX can still get higher-leverage accounts.

1123

The Collective FX Global (thecollectivefxglobal.com) also says they continue accepting and servicing US customers.

1124

India-based xoomforex.co says the same: “Yes We accept us customers.”

1125

From the [B]Investors Europe[/B] webpage which [B]Sunland[/B] linked to:

"The SEC’s interpretation of U.S. federal securities laws limits Non U.S. Broker-Dealers to working with those permanently resident outside the USA…

“U.S. customers wanting to work with Non U.S. broker-dealers can thus only approach Non U.S. broker-dealers under Rule 15a-6 if they have not been to their web sites and should be prepared to certify this fact in writing to ensure compliance with applicable law. Accepted unsolicited [B]U.S clients may only be offered 50/1 leverage in compliance with U.S regulations[/B].”

Investors Europe seems to be confused about which U.S. agency regulates retail forex. SEC regulations have nothing to do with retail forex.

Nevertheless, it is clear that Investors Europe has caved in to U.S. pressure, just like most of their competitors. I’m really disappointed to see this — I was starting to think of them as one of the stars on our List.

On the next update of the List, I will add a note to the listing for Investors Europe, indicating their position. For now, I will not remove them from Group 1 on the List. However, it appears that U.S residents are no longer welcome at Investors Europe.

1126

The UK-based real-forex.com has also confirmed they continue to accept the US customers.