Anyone knows why usa residents can't open forex account in hotforex or other brokers?

Tim Smith said:
Its not only the items mentioned above.

It doesn't matter if its FX, Equities, Bonds or anything else.

Americans are not welcome abroad because of the amount of bureaucracy and hassle it takes to both onboard and maintain Americans as clients.

We're not talking KYC here. We're talking paperwork beyond that, on the brokers side, for reporting etc.

A large part of it comes down to the worldwide taxation policy the US has, hence the IRS wants to collect data on what its citizens are up to abroad. And that generates a whole load of additional admin paperwork that quite frankly is not financially worth it for the majority of small-time americans who would be opening accounts abroad.

There are also draconian penalities for any financial firm that fails to comply with the stupidly complex rules surrounding the reporting. This only serves to increase their reluctance to deal with yanks.

The general state of play you'll find is they'll refuse new accounts from US citizens, and (if they have not already done so) tell existing US accounts to go back where they came from.
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A broker's world is made of paperwork. I hear this "there's too much paperwork to deal with Americans" thing all the time and it's just baffling to me. Have you ever tried to set up a business in France? Any business? Talk about paperwork and legal requirements, it's insane compared to doing so in the U.S. And yet thousands of companies manage just fine. Any broker anywhere has myriad legal and reporting requirements, you just put processes into place to deal with them and hire a good compliance team. I can't believe that the incremental increase in paperwork necessary to give you access to one of the biggest markets in the world is soooo onerous that it's beyond the capability of a legitimate firm outside the U.S. Is it a bit of a pain, sure. Is it more than it should be, absolutely. Is it worth throwing away a significant chunk of business for? That seems like a pretty petty and weak excuse. Note I say legitimate firm because the real reason the vast majority of bucket shops don't operate in the U.S. is because they're bucket shops and would face legal action for the way they run their "businesses".
 
Agree establishing business everywhere has its own problems somewhere its bribery somewhere it is red tapes and compliancy issues. Bucketshops or even reliable brokers outside US won't simply meet the competition with domestic brokers which will be always considered more safe and fair. US clients just don't worth the money they deposit (and lose), other world is full of yet-to-become traders, forex trading niche is basically just started to be filled up with quality services.
 
doggyfx said:
Yes for bucketshops... but normal brokers do suffer from this too.
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Actually i think that US traders are being restricted by the US law and it might be due to taxation purposes that the govt want their US traders to invest in their own country and pay taxes to the govt on any gain.
 
Pekelo said:
It is exactly the same reason why casinos don't like/want online gambling. Nobody wants competition.
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I don't think CME is worried about losing volume to bucket shop binary operators. The venn diagram between the dollars invested by their existing customers and dollars invested by potential bucket shop customers probably looks something like this:
venn1.gif

If anything it's the casino's who don't want the binary operators, or is that what you were saying all along? If so, makes sense!
 
Turveyd said:
FXCM are legit, very few others are, go with them IMHO!!

America blocked out of country gambling as such, Forex is classed as gambling, basically they don't mind Americans losing Billions at poker while drunk to each other but they don't want that money leaving the country.
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I agree 100% . not to mention selling cigarette and collecting taxes on a product that kills you .
 
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