Are US citizens allowed to trade FX with foreign brokers?

P

PlusMinus

Seems there are a number of ECN-type brokers in the UK or Swiss. Are these open to U.S. citizens according to current U.S. law, or are U.S. citizens limited only to the brokers/ECNs that are NFA regulated?

My understanding was that since FX is not a regulated instrument that there are no restrictions, so long as you report all earnings for tax purposes. Is this correct?
 
Yes that is true. Firms that do offer CFDs and the like on exchange-traded commodities and stock indices can not accept U.S. customers. If they offer f/x only, no problem.

There are still a few fx firms that don't accept u.s. citizens no matter what, not sure why.
 
Quote from Pippi436:

Yes that is true. Firms that do offer CFDs and the like on exchange-traded commodities and stock indices can not accept U.S. customers. If they offer f/x only, no problem.

There are still a few fx firms that don't accept u.s. citizens no matter what, not sure why.
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To clarify, if the firm only offers spot FX instruments, they can accept U.S. customers? But if they allow trading in CFDs or other non FX markets, then they can't accept them? Is that a rule in their country or in the U.S.? It would seem as long as a U.S. citizen is not trading those instruments, it shouldn't matter what their offerings are.

But I guess there are plenty of spot FX only foreign brokers so it's not that big a deal.
 
I'm not entirely sure what the legal situation exactly is, i only know that RBS Marketindex, CMC and so forth all don't accept u.s. clients. I really doubt that the problem is in european legislation, my guess would be that they would run into problems with uncle sam of some sort. Yes, most euro-based fx-only firms do accept american clients.

In any case, CFDs on exchange-traded instruments is a total no-go in the USA itself. Judging from the countless tears being shed in the euro-trading foums you are better off without this industry anyways.
 
Quote from Pippi436:

I'm not entirely sure what the legal situation exactly is, i only know that RBS Marketindex, CMC and so forth all don't accept u.s. clients. I really doubt that the problem is in european legislation, my guess would be that they would run into problems with uncle sam of some sort. Yes, most euro-based fx-only firms do accept american clients.

In any case, CFDs on exchange-traded instruments is a total no-go in the USA itself. Judging from the countless tears being shed in the euro-trading foums you are better off without this industry anyways.
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At the end of the day all I really care to know is that the U.S. laws allow or rather don't disallow trading spot FX with foreign brokers. Seems the consensus here is that they don't disallow it.

The only reason to care is that there is a wider number of options to chose from when including the foreign brokers with ECN models.
 
Quote from PlusMinus:

Seems there are a number of ECN-type brokers in the UK or Swiss. Are these open to U.S. citizens according to current U.S. law, or are U.S. citizens limited only to the brokers/ECNs that are NFA regulated?

My understanding was that since FX is not a regulated instrument that there are no restrictions, so long as you report all earnings for tax purposes. Is this correct?
More...

And if the broker goes Refco in another country, what is your recourse?
 
I trade with FXCM UK. Active trader platform.

No problems hedging, not getting hit by the reduced margin issue.

The only difference, as has been already been mentioned, is that its not regulated by the NFA.

Instead, I'm regulated by the FSA. Its not like they are registered in Botswana, but its not the NFA.
 
Quote from TraderZones:

And if the broker goes Refco in another country, what is your recourse?
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I suppose like anything, don't risk more than you're willing to lose.
 
Quote from 4EXJOE:

I trade with FXCM UK. Active trader platform.

No problems hedging, not getting hit by the reduced margin issue.

The only difference, as has been already been mentioned, is that its not regulated by the NFA.

Instead, I'm regulated by the FSA. Its not like they are registered in Botswana, but its not the NFA.
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FXCM UK segregates client funds according to FSA client money rules, so the FSA is ahead of the curve as far as funds segregation.
 
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