FXCM directing applicants to the UK

The FXCM application page reads the following:

Non-U.S. residents will be directed to our U.K. entity in London, which is regulated by the FSA.
Residents of Australia and New Zealand will be directed to our Australia-based entity in Sydney, which is regulated by ASIC.

I asked FXCM why non-U.S. residents (I am temporarily living outside the U.S.) were being directed to the U.K. They said because it allowed the client continued use of stops, limits etc.
I asked if I still had the option of opening a U.S. account.
They explained all the benefits of a U.K. account and that they personally believed it to be preferable to open an account in the U.K.
I asked a couple more times if I could open an account in the U.S.
They said yes, but I would have to do it on paper and it would probably take 30 days.

I'm just guessing, but I think if a potential non-resident newbie, with at least $2000 wanted to open a U.S. account, the application would be processed as quickly as possible.

I like the U.K. for its segregated accounts and the use of stop/limit, but the directing of FXCM leaves me wondering.
Maybe FXCM is experiencing a huge increase in U.S. clients as brokers fold under new CFTC regulations; and they are just using their U.K. entity to ease the load.
Maybe the FSA is not as strict as the CFTC. I keep hearing the FSA is much bigger and older than the CFTC, but I haven't heard how the FSA's regulation of Forex compares to the CFTC.

This was a long intro for basically two questions:

1. Why would FXCM direct non-U.S. residents to the UK?

2. What are the specific regulations imposed by the FSA on Forex brokers.
(I've been to the FSA website, but it was an intellectually humbling experience)

Thanks for any insight

hi jstrm,

I'm working to get an answer for you on this one.

For now I can tell you that you can still open through FXCM US if you want to. Choose United States on the starting page. When the new online application page opens, you will be able to select any country in the citizenship and residency fields.

The applications take 1-2 business days to process regardless of whether you open through FXCM US or FXCM UK.

Residents of Australia and New Zealand have been directed to FXCM Australia since the opening of FXCM Australia in 2008.

-Jason

Well, one reason might be that FXCM is upset about the fact that they can't edit orders after the fact anymore.

NFA has a rule that one an order goes through, doesn't matter what happens, the retail trader can't adjust you downwards.

If their system spikes, then they're kinda screwed.

If there is ever a bad tick, we will go through and credit back the loss that may have resulted from it. Here is a good discussion I had recently on a bad tick which occurred Wednesday, and how we resolve it.

http://www.informedtrades.com/498963...xcm-chart.html

Some FX dealers might be seeing the handwriting on the wall as far as government regulation goes. A lightly regulated FX market is a bit too good to be true, and if your average Joes are really getting into FX you better believe Papa Sam is going to be hovering behind to make sure junior doesn't scrape his knee, and wind up hurting everyone with stupid regs. I'd rather have an offshore account, personally.

Answer to question 1: The trading station that FXCM UK uses works pretty much like the pre-FSA regulated station at FXCM US, where FIFO is now the rule of the day. I moved my station to the UK to maintain some operational consistency and will keep it there until there is some reason to move it back. I am experiencing no problems since moving over several weeks ago. BTW - the functions that the UK operations is maintaining is the ability to set stops and limits on each trade, and the ability to quickly close a trade from the station. In addition, the UK station allows hedging but I do not use that function.
Answer to question 2: Basically, all orders are to be processed first in first out (FIFO). The best explaination for FIFO exits on the FXCM web site, so you should check it out.

BTW - just for the record, I have no connections to FXCM other that I am a customer of theirs. They have always been fair with me, although I think they are slow at communicating things to their customers (this may be changing because I received an email from them today telling me that a software change will be available this week end, which is the first time they have ever announced a planned software update).

Since you're only allowed to credit people for losses that must get really really expensive.