no regulations stopping US residents from opening offshore accounts

as of now there is no regulation stoping u.s. residents from opening offshore account, here's a reponse from a broker i talk

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James: hi, with new regulations in the u.s.a. will i be allowed to open a account with you guys as a u.s.a. resident


dbFX Sales and Client Services: As of now yes you can open an account with dbFX as there is no regulation holding you from doing so.


whats so crazy every u.s. broker i talk to have no understanding about the new regulation, they keep saying where waiting for clarifacation

There may not be a specific regulation stating you can't open an overseas account, but that doesn't mean you won't have a problem potentially. I attached a document from the CFTC (a better authority on the matter than the dbfx rep). Check page 2, where it says:

"Moreover, where the list of eligible counterparties previously included “financial institutions,” the Dodd-Frank Act specifically provides that among financial institutions, only United States financial institutions are permitted to act as counterparties."

What does all that mean? Well, who knows. But the interpretation FXCM has about it is that US traders may have to repatriate their funds back to the US, which has me wondering how they would enforce that. But if it involves some kind of hassle from the CFTC and/or IRS, I'm not going to mess with it.

Of course we still don't know, but hopefully we'll have clarification on it after Oct 18...

whay should we have to wait for clarification oct 18, whats so hard that a u.s. broker can't pick up the phone and call the regulators and ask a simple question, can u.s. traders be allowed to have offshore fx account with a offshore broker?

I'm an American but my wife is a Brit so I'm covered. If I were some of you guys, I'd open an account or two overseas now. They may grandfather existing accounts. It just seems to me the path will be to deny Americans the ability to open offshore eventually.

You'd need to ask the brokers that question. I'm just mentioning that there could still potentially be a problem if accounts have to be repatriated later. If they don't, then we all live happily ever after. All I was saying is it's my personal preference to wait and see how it all plays out.

Re. brokers calling the CFTC and asking a "simple question", if it really was that simple, I think it would have been done by now. More likely this is an unintended gray area that needs to be clarified by the CFTC before anyone really knows what the deal is.

Dude, do you have any experience dealing with lawyers, let alone a whole group of them? Then again, I almost got into a fist fight with my own lawyer

Below is an US law firm's interpretation of the regulation:

.......Further, there is nothing in the final rules which makes it illegal for U.S. retail forex traders to seek additional leverage from abroad. Given the lack of an express prohibition, so long as U.S. retail forex traders abide by U.S. tax laws, it seems unlikely that the CFTC would make any attempt to pursue these individuals. However, because many of the larger forex intermediaries have U.S. operations and many of the established intermediaries will want to avoid conflict with the CFTC, retail clients should probably be wary of those counterparties willing to offer them additional leverage.......

http://www.investmentlawgroup.com/in...227&Itemid=127

never had a need too. but i see what your saying

A trader wrote to the CFTC, here is the answer:

(Quote)
"Below is an official clarification on the new CFTC regulations which I have received directly from the CFTC:

Dear Mr. XXXXXXXX,

Your email has been forwarded to me for response. In answer to your first question, in the year 2000, Congress amended Section 2(c)(2)(B) of the Commodity Exchange Act (7 USC 2(c)(2)(B)), setting out who is allowed to serve as a counterparty to a retail off-exchange forex transaction; these are often referred to as the “enumerated” or “eligible” counterparties. Among the eligible counterparties were affiliates of CFTC-registered FCMs and financial institutions (which includes foreign banks). It was through these two categories that off-shore entities were allowed to serve as counterparties.

However, two things have changed. First, in 2008, the Congress passed the Farm Bill, which directed the CFTC to register counterparties as either FCMs or Retail Foreign Exchange Dealers (RFEDs). The recently published final rules, which take effect on October 18, 2010, reflect this statutory mandate, so as of October 18th, foreign affiliates of US FCMs will no longer be able to offer to serve as counterparties to US retail customers unless they become registered with the CFTC as FCMs or RFEDs.

Second, although foreign banks are currently able to offer to serve as counterparties, the recently pass Wall Street Reform and Consumer Protection Act has once more amended Section 2(c)(2)(B) eliminating the provision permitting foreign banks to serve as counterparties. This change will be effective in July of 2011.

I realize this is a long answer, but the upshot is, if your “foreign broker” is an unregistered affiliate of an FCM, as of October 18th, it will either have to be registered as an RFED or FCM, or transfer accounts to someone who is. If your “foreign broker” was a foreign bank, it can continue to serve as a forex counterparty to US retail customers until July of next year. Security deposit/leverage rules will apply to all registered entities doing business with US retail customers.

I hope this proves helpful.

Sincerely,


William Penner
Deputy Director, Compliance and Registration
Division of Clearing and Intermediary Oversight
Commodity Futures Trading Commission

(202) 418-5407


From: questions
Sent: Tuesday, September 07, 2010 4:36 PM
To: DCIO Internet
Subject: FW: Questions on the new Forex regulations





From:XXXXXX
Sent: Monday, September 06, 2010 12:13 PM
To: questions
Subject: Questions on the new Forex regulations


Hello,

I have several questions pertaining to the most recent Forex regulations implemented by the CFTC which become effective on October 18, 2010. In particular, I would like to know the following:

1. Will foreign-based Forex brokerages be allowed under the US law to continue servicing US customers after October 18, 2010? If so, for how long?

2. Will the new leverage requirements apply to those Forex brokers servicing US customers after the aforementioned date?

I look forward to your prompt response.

Thank you in advance.

Kind regards,
XXXXXXXXXX "

Well, that pretty much settles it.


I just needed to get that out of my system

So my interpretation of that CFTC letter is as follows:

1) I will no longer be able to use my FXCM UK account as of October 18.

2) I can still use GoMarkets for now, since GoMarkets is not a foreign affiliate of an US FCM. However, GoMarkets client funds are held by National Australia Bank. As the CFTC letter states: "the recently pass Wall Street Reform and Consumer Protection Act has once more amended Section 2(c)(2)(B) eliminating the provision permitting foreign banks to serve as counterparties. This change will be effective in July of 2011."

I think that effectively means I won't be able to use GoMarkets as of July of 2011, sigh. I'm not a lawyer, but that CFTC letter seems to be pretty clear (if National Australia Bank is considered to be a counterparty in relation with GoMarkets).

Correct me if I'm mistaken...

Perhaps I am reaching a bit too far with what I am about to say, but isn't the operative key word here "Counterparty" that can determine the situation? What if your foreign broker is not a counterparty as many brokers utilize a Straight Through Processing system and their contracts state that they are not the counterparty to your trades and do not take the other side? In that case there is no conflict of interest.

I was doing the same consideration after reading this response, but the all think doesn't look making lot of sense. Maybe the CFTC person was specifically replying to the trader who felt in the condition to be off-shore thorugh an affiliate of a US firm.

What is clear is that FXCM, FXSOL, ALPARI, GAIN, FXDD, and forgive me If I am missing any will be "forced" to return the US accounts back, threatened by regulatory actions to their US affilitate, while the others with no US affiliation Like gomarkets as you mentioned or Saxo will be ok, or in the worst case scenario outlaws in the US....

Now the piece we're missing here is how the CFTC plans to make these rules enforced. Clear having authority on US firms, less clear how they plan to scare other foreign companies in full compliance with regional rules. However, as I suppose there is no "sovietic-like" restriction on us traders to open accounts off-shore. It is much effective and easy to regulator to chase firms rather than private investors.

All looks like another "no-sense" scenario but is possible. FX-Pro misteriously stopped accepting US customers a while ago, other will follow to avoid hassle, but here look like we're doing "catch me if you can..."

I believe they tried really to keep firms competitive. Instead they will just push traders to more unregulated, less rule caring, unscrupolous brokers, willing to bid for the large US market-share.

The US has no control or jurisdiction over banks in other countries.

You know what, screw all this extraterritorial bureaucracy. Time to say hello to the CFTC, FIFO, non-hedging, and 1:50. As long as the pip cost per lot remains the same, I hope, I'm not going to mind the 1:50 leverage. All I need is twice the amount of initial money, and have to use twice the margin on a trade than originally planned in order to maintain the same amount of profit. Now I hope they don't make it any worse, at least, until eight or so years from now. That will give me enough time to get what I want out of forex.

It's good to see that at least SOMEBODY got some kind of response from the CFTC regarding the ambiguity of their decree.

But there is one issue in this discussion that has been noticeably absent, that of OUR ECONOMIC FREEDOM.

What was the reason for decreasing leverage to 50:1? [and for you newbies, they just cut it back to 100:1 only about a year ago].

The justification was to supposedly "protect us." From what? Apparently ourselves. The assertion is that we [retail traders] are too stupid to understand what heck we're doing, and by cutting our leverage back, we're less dangerous to ourselves.

Well, to that, I say they can kiss my hairy country behind!

It is an absolute fact that a gambling idiot will lose his acct whether it's 500:1 or 50:1. It is also an absolute fact evident to anyone who has ever approached trading with half a brain that the dangers lie not in leverage per se but in the overarching risk management system that's in place [if you just said "what's that?" see the first point].

I don't know about anybody else, but since when was it the CTFC's job to protect us against OURSELVES? How about focusing on the Madoff's, the Credit Swap kings, and the individuals and institutions that are actually doing something illegal -- NOT the regular Joe's who are just trying to make a living...

And with respect to the offshore broker issue: When in the heck, except for the State Dept's blacklist, did the CFTC or anyone else in government have the constitutional right to prevent us from doing business with a legitimate non-US broker, bank, auto maker or taco shop? Huh?

I was griping about this 'ruling' in earshot of someone I would consider a historian, and she immediately began to rattle off some oddly similar instances as the 'iron curtain' began to be put up.

Thank God for brokers like Go Markets who believe -- and rightly so -- that they're not under the CFTC's thumb.

I already wrote my congressman, and I urge all who read this to do the same. And come November 2nd, let's start puttin someone in charge of the asylum besides the inmates...

That's my 2c, for what it's worth.

Exactly !

This is precisely where this thread needs to focus, relative to the FinReg (Dodd/Frank) Law in the United States.

Look at what the regulations says, folks. In essence, if you are a U.S. based citizen, you cannot take your own private funds and open an account with a foreign bank, for the purpose of trading in the international currency markets.

Excuse me, but this is NOT Germany, circa - 1940! No offense, to my German trading brothers and sisters of today.

Here's the equivalent scenario: I get on a plane, fly to Switzerland, get into my rental car, drive to a Swiss Bank, open an account (either personal or business), get back in the rental, drive to the airport, fly back home to the United States, only to have the United States Congress waiting for me as I come back through customs, telling me that I somehow broke Dodd/Frank.

That is absurd. If I can open up a Swiss, Bahamas, Australian, Caymans, Brazilian, Greenland, Iceland, Portuguese, Polish, Timbuk Tu, bank account with my own funds AND then, engage in a "foreign currency transaction" where I "exchange" my USD for "XYZ foreign currency," in a "spot" transaction (indeed, right on the spot) - then how on this GREEN EARTH, can Dodd or Frank, tell me that I can't???

It makes no sense. It is not legal, enforceable, or Constitutional for that matter.

When I visit Los Cabos, Mexico, I engage in "spot foreign exchange" transactions - all day long. Yet, neither Dodd nor Frank, has anything to say about those transactions. But, if I open up an account with a bank in London, for the purpose of having that bank carry out my "spot fx" transaction, then all of a sudden, Dodd and Frank get their panties tied in a knot.

How utterly ridiculous is that?

Furthermore, foreign banks that are not chartered and regulated inside the United States of America, cannot be told what to do by the United States Congress. All that bank has to do is shut-down ANY and ALL "Retail FX" offerings here in the U.S. and simply pack-up that side of its business and move it back home. In the case of Deutsche Bank FX, for example, they don't have to maintain a New York FX office. Not at all. They can simply migrate all U.S. sources accounts to Germany or London and leave no footprint here in the U.S. to be forced under the CFTC regulatory umbrella cast by Dodd/Frank.

If DBFX, no longer offers Retail FX on U.S. soil, then how is it possible for Dood/Frank and/or NFA/CFTC and/or CRA to regulate that bank? Impossible - can't be done legally. Deutsche Bank is regulated by FSA in London, not the CFTC in the U.S.

If I want to open an account with a foreign bank and engage in an international financial transaction, as a Private Citizen of the United States of America, then who is Dodd/Frank/CFTC/NFA to stop me?

The server that my trading platform connects to would be overseas. The account that I trade out of would be overseas. That account would be held overseas. The account would be regulated overseas. All transactions would be executed on a host system that is overseas. Customer service is overseas. My original account opening documents were sent overseas. My actual accounts funds would be held in segregation or under the bank deposit funds protection program - guess where - that's right - overseas. Everything about the entire transaction and business set-up would be.......... overseas, except one thing - my physical (bodily) position on earth. That would be right here in the United States of America.


Folks, what this gets down to is a government, not attempting to protect its citizens from fraud, but to run the private lives of its citizens and that I will not abide. This is a violation of my Constitutional Rights, as it attempts to prevent me from engaging in "relationships" (business or personal) that I deem appropriate for myself. It forces me into a monopolistic business practice, which itself is a clear violation of United States Code. And, it attempts to prevent me from exercising my personal freedom of choice, as to whom I engage for the provision of service(s) rendered unto me, at my discretion and for whatever purpose I deem necessary.

It is for these reasons (and others) that I hereby declare all sections of the Dodd/Frank law pertaining to the requirement that ANY Foreign Exchange Transaction engaged in by a U.S. Citizen, must be done with a U.S. based Foreign Currency Exchange Counter-Party registered with the CFTC; are all at once un-constitutional and thus null and void as having any binding and/or bearing on any Citizen having residence within the United States of America.

[and I'm a Democrat for goodness sakes!!!]

So say one, so say we all!

so say we all!

This is just one step closer to stop Forex Trading at the Retail level. We should all be outraged at this. Our liberties are eroding fast. This has zip to do w protecting the retail Clients but has everything to do w tighter controls to strangle them. IMO

Wait until u are prohibited from growing your own garden just to survive starvation. If America does not care about its freedom, then I no longer care to have any part in this! This Nation is finished, and headed for hades, simply because no one even cares anymore to be heard! Wake up as your last totalitarian breath may be tomorrow. IMO


ut2