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CFTC NEW Document - Overseas Accounts OK?

  • #41
  • Sep 6, 2010 2:51pm Sep 6, 2010 2:51pm
Quoting Jhig
At this time, I would not believe anything your broker says about the matter....
thank you josef!
  • #42
  • Sep 6, 2010 2:59pm Sep 6, 2010 2:59pm
Quoting Jhig
At this time, I would not believe anything your broker says about the matter....
Good post and perhaps you have hit on the reason for this language in the bill. It's no secret there are a lot of shady brokers out there and this is probably an attempt to rein that in somewhat. Even if it is not enforceable it does send a message that it is on the radar. So it provides an incentive to move reputable brokers in one direction and a discentive to the rest.

On the other hand it could just as easily have been the wall street bought and paid for politicians who got this language put in there for the benefit of the big banks.
  • #43
  • Sep 6, 2010 3:46pm Sep 6, 2010 3:46pm
Quoting Jhig
Instead of brokers moving accounts overseas, I'm hoping brokers would become banks and move away from CFTC/NFA/SEC regulations. There are a lot of benefits to trading with a bank, such as funds protections (FDIC). For those that don't know what I'm talking about, look into CitiFX and DBFX. These brokers banks and are under banking regulations and do not have to deal with CFTC rules/regulations. Would like to see US brokers follow the ways of Dukascopy, SaxoBank, Citi, DBfx.
Hi Jhig, do you use one of the banks listed? In addition, I agree with your comment about our ability to use non-US brokers. I think any regulation would not stand up to a US court action.
  • #44
  • Sep 6, 2010 4:10pm Sep 6, 2010 4:10pm
Quoting Jhig
Instead of brokers moving accounts overseas, I'm hoping brokers would become banks and move away from CFTC/NFA/SEC regulations. There are a lot of benefits to trading with a bank, such as funds protections (FDIC). For those that don't know what I'm talking about, look into CitiFX and DBFX. These brokers banks and are under banking regulations and do not have to deal with CFTC rules/regulations. Would like to see US brokers follow the ways of Dukascopy, SaxoBank, Citi, DBfx.
There are a lot of reasons why, coming from the bucketshop world, spot brokers would not want to do this. And maybe it remains to be seen if the Volcker Rule will have an impact on US banks running retail fx shops.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #45
  • Sep 6, 2010 4:14pm Sep 6, 2010 4:14pm
Quoting Jhig
At this time, I would not believe anything your broker says about the matter....
Jhig,
The CFTC can't regulate oversees brokers but what if the broker has a branch in the US and in the UK like FX Solutions? Can they punish the US branch for offering accounts in the UK somehow? That's what I'm worried about. They'll be able to twist these brokers arms more if the broker has branches in both countries.
Also, I wouldn't put it past the IRS to make things difficult on the individual trader(audits) if you're using an oversees broker.
  • #46
  • Sep 7, 2010 12:08am Sep 7, 2010 12:08am
Quoting Toothman
Jhig,
The CFTC can't regulate oversees brokers but what if the broker has a branch in the US and in the UK like FX Solutions? Can they punish the US branch for offering accounts in the UK somehow? That's what I'm worried about. They'll be able to twist these brokers arms more if the broker has branches in both countries.
Also, I wouldn't put it past the IRS to make things difficult on the individual trader(audits) if you're using an oversees broker.
Your last sentence sums up all of the US power in this matter...the Dodd Frank bill will not change the fact that the only recourse the US has over foreign investments is to tax them.

This period of history (for me at least) will be the time I look back and say " thats when I started taking 38% out and keeping it in a separate US bank account.

Just take the max tax, and bank it...then invite the IRS over.
  • #47
  • Sep 7, 2010 4:33am Sep 7, 2010 4:33am
Quoting pilotui
Just take the max tax, and bank it...then invite the IRS over.
You have obviously never had to deal with them. I ended up beating them, but no one walks away without some scars.
  • #48
  • Sep 10, 2010 11:29am Sep 10, 2010 11:29am
I hope you are correct about all the CFTC BS, jhig. The vast majority of real traders from the USA want to keep there accounts with USA based brokers but not under the oppressive nature of the things being thrown around right now.
Quoting Jhig
At this time, I would not believe anything your broker says about the matter....
  • #49
  • Sep 10, 2010 1:02pm Sep 10, 2010 1:02pm
Such a regulation would not fall into their competence. It is not their business to forbid any US citizen to transfer his money to bank (or other) accounts in foreign countries. They regulate trading of certain securities within the US and not how people spend (or earn) their money elsewhere.

Neither you as a private person are regulated by the CFTC (you are regulated by laws but not by the CFTC) nor would your overseas broker be regulated by them. Naturally there cannot be anything about this in any of their documents.
  • #50
  • Sep 10, 2010 1:25pm Sep 10, 2010 1:25pm
Quoting 7bit
Such a regulation would not fall into their competence. It is not their business to forbid any US citizen to transfer his money to bank (or other) accounts in foreign countries. They regulate trading of certain securities within the US and not how people spend (or earn) their money elsewhere.

Neither you as a private person are regulated by the CFTC (you are regulated by laws but not by the CFTC) nor would your overseas broker be regulated by them. Naturally there cannot be anything about this in any of their documents.
7bit,
Do you think this reply to a trader is just CFTC blowing hot air trying to scare us back to the US. Or can they make it painful to continue to trade oversees through maybe the IRS? Please read the reply below.

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
  • #51
  • Sep 10, 2010 2:28pm Sep 10, 2010 2:28pm
Quoting Toothman
7bit,
Do you think this reply to a trader is just CFTC blowing hot air trying to scare us back to the US. Or can they make it painful to continue to trade oversees through maybe the IRS? Please read the reply below.

Quote)
"Below is an official clarification on the new CFTC regulations which...
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.

So it clearly states that they have no power what so ever over foreign owned/operated brokerages like go markets...who have NO ties to the US
  • #52
  • Sep 10, 2010 2:56pm Sep 10, 2010 2:56pm
Quoting pilotui
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.

So it clearly states that they have no power what so ever over foreign owned/operated brokerages like go markets...who...
Assuming they can't control the broker, can they strong arm the US trader if he/she uses someone like Go Markets? thanks.
  • #53
  • Sep 10, 2010 3:08pm Sep 10, 2010 3:08pm
Quoting Toothman
Assuming they can't control the broker, can they strong arm the US trader if he/she uses someone like Go Markets? thanks.
But let me play devils advocate. How are current US citizens who own/operate businesses abroad (Europe, Carribbean, mexico etc...) and make an income on those businesses "strong armed"???

They pay US taxes.

That is ALL the US can do...I mean look at that senator from DC...Charlie Rangel...he's in trouble because he rented out his condo in the Dominican and didn't pay taxes on the income he banked. He's a US citizen making money in another country, all while living in the US...how is that any different than any forex trader who makes money from Austrailia? As long as you pay your taxes, what can they do!????
  • #54
  • Sep 10, 2010 3:37pm Sep 10, 2010 3:37pm
Quoting pilotui
But let me play devils advocate....
I hope your right. I plan to pay my taxes as I always do. I just want to trade without Barney frank jerking me around. I wouldn't put it past them to flag me for audits if I try to go around them like this though.
  • #55
  • Sep 12, 2010 6:08am Sep 12, 2010 6:08am
Quoting pilotui
But let me play devils advocate. How are current US citizens who own/operate businesses abroad (Europe, Carribbean, mexico etc...) and make an income on those businesses "strong armed"???

They pay US taxes.

That is ALL the US can do...I mean look at that senator from DC...Charlie Rangel...he's in trouble because he rented out his condo in the Dominican and didn't pay taxes on the income he banked. He's a US citizen making money in another country, all while living in the US...how is that any different than any forex trader who makes money...

If it was about us paying taxes then why jerk us around with the CFTC / NFA and all the strict rules? They got over 9000 responses as to what we want did they not? They are forcing you to use 'other means' as a way to trade you want. It does nothing for the honest Joe who pays his taxes.

Sing America the Beautiful for me and tell me how 'free' you feel about now? Let Freedom Ring? Anybody?

You can easily set up an 'offshore' company from the comfort of your trading room and easily by-pass all this hedgemony. In my mind this is only to take the 'little guy' out of the market. But only because the 'little guy' may not know otherwise and give up in frustration.

If you were a crook or looking for crooked means to avoid taxes they are litterally going to great lengths to show you how to do it. If they would have left it alone at 100:1 I really wouldn't have had much a reason to look into it.
  • #56
  • Sep 12, 2010 6:39am Sep 12, 2010 6:39am
Anybody trading with MB trading, US? I trade with MB trading and did not receive any formal email or any kind of notification about the leverage change. I am going to contact them, but i hope they will still give me the 100:1 leverage.
  • #57
  • Sep 13, 2010 11:01pm Sep 13, 2010 11:01pm
Not 100% sure but they are not apart of the FXDC

http://forexmagnates.com/mb-tradings...-requirements/
  • #58
  • Sep 14, 2010 7:50am Sep 14, 2010 7:50am
Quoting EricF
Not 100% sure but they are not apart of the FXDC

http://forexmagnates.com/mb-tradings...-requirements/
That link is dated Jan 27,2010 and was issued BEFORE the comment period ended. [Old News]
  • #59
  • Last Post: Sep 29, 2010 11:15am Sep 29, 2010 11:15am
Quoting Xxavier
Anybody trading with MB trading, US? I trade with MB trading and did not receive any formal email or any kind of notification about the leverage change. I am going to contact them, but i hope they will still give me the 100:1 leverage.
Yes, I got this e-mail from them today:

Dear Valued Client,

The CFTC has recently released new rules that go into effect October 18, 2010. Included in these new rules is an increased margin requirement from 100:1 to 50:1 for the major Forex currency pairs. Clients who are highly leveraged may need to take action ahead of the start of trading on October 17 (5:00 PM EST) to prevent margin selling in their account. This affects our Desktop and MetaTrader 4 accounts equally.

For a complete overview of the CFTC’s newly adopted rules and what these changes will mean to you, please visit: FOREX CFTC RULING.

This new margin requirement will affect all existing positions as well as all new pending orders on the effective date. Please note that the changes will have no impact on spreads, execution, or commissions. Swap rate charges will DECREASE slightly, as less money is being borrowed to place a trade.

If your current account margin is greater than 50:1 please consider what actions you will take to meet the new margin requirements when the rule goes into effect. If you wish to make an additional deposit to address the new margin rules or to maintain your current trading size, please visit FOREX Deposits for funding instructions. You can also contact customer support at 866-628-3001 if you need help calculating how these changes will affect your existing positions before the deadline. Partial positions will be liquidated in any accounts exceeding the 50:1 margin requirement when the rules go into effect to bring the account into compliance.

All live GTC orders which would cause your account to exceed the new 50:1 margin rule on October 17th will be rejected in their entirety. Please reduce the size of these trades or cancel them accordingly. Our systems will go live with these changes one day early, on Sunday, October 17.

You may also visit the CFTC website for their documents on the new requirements and policy: CFTC Factsheet PDF.

Best Regards,

MB Trading Futures
MB Trading: FINRA/SIPC Member
MB Trading Futures, Inc.: NFA Member
1926 E. Maple Avenue
El Segundo, CA. 90245
www.mbtrading.com

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