CFDs and American Citizen

T

trading_time

Hey, little bit of a conundrum here. I am an American Citizen, but I do not live there and am not a current resident of the USA.

I am holding residency in another country.
I have ID from this country.
and Banking in this other Country, also have house and address, and bills.

The problem is I went to open an account at a CFD shop and they are asking where I am Citizen from, I do not wish to lie. But if I say USA, will they deny the account?

I know other Americans are starting accounts at CFD shops..

What is the trick?
 
simple solution, don't bother trading cfds

my experience trading cfds offered by fx brokers is that the margin is expensive and
that they don't provide the same profits as the underlying futures contracts
 
Quote from trading_time:

Hey, little bit of a conundrum here. I am an American Citizen, but I do not live there and am not a current resident of the USA.

I am holding residency in another country.
I have ID from this country.
and Banking in this other Country, also have house and address, and bills.

The problem is I went to open an account at a CFD shop and they are asking where I am Citizen from, I do not wish to lie. But if I say USA, will they deny the account?

I know other Americans are starting accounts at CFD shops..

What is the trick?
More...

U.S. regulations on products that can be marketed to U.S. citizens have an exemption for U.S. citizens resident abroad.

So you should be ok.

However, some (but not all) foreign banks and brokers are dumping all U.S. citizens because it is too much trouble figuring out who is and who is not subject to pending FATCA / HIRE Act special reporting and withholding requirements that they are supposed to apply to all U.S. citizens.

Check with Interactive Brokers UK (or elsewhere outside the U.S.) and see what they say. They offer CFD's to non-US persons and are very savvy tax-wise.
 
Quote from Wallace:

simple solution, don't bother trading cfds

my experience trading cfds offered by fx brokers is that the margin is expensive and
that they don't provide the same profits as the underlying futures contracts
More...

Those are not the only kinds of CFD's.

CFD's are a very common way of trading stocks (not futures) in many countries that are used to avoid transaction (stamp-duty) taxes.

They are offered by Interactive Brokers in many countries (e.g. UK, HK, others).
 
If you have sources where I can find this sort of information I would appreciate it.


Quote from comintel:

U.S. regulations on products that can be marketed to U.S. citizens have an exemption for U.S. citizens resident abroad.
More...
 
Quote from trading_time:

If you have sources where I can find this sort of information I would appreciate it.
More...

On the securities side, see
http://www.sec.gov/divisions/marketreg/faq-15a-6-foreign-bd.htm

look for "U.S. citizens resident abroad"

On the commodities side, the CFTC has a similar exemption.

And there is another exemption there in any case allowing foreign brokers to accept unsolicited U.S. clients, even those residing in the U.S. (but most will not because of the complexity of it all and FATCA reporting requirements etc.)
 
Quote from comintel:

Those are not the only kinds of CFD's.
More...
remembered there's stocks offered on one of the mt4 demos I have, aside from the
transaction taxes. if they're anyway similar to futures cfds they aren't worth trading
imo fx pairs especially with the 4-500 leverage are still the best bang for a buck
 
Quote from Wallace:

remembered there's stocks offered on one of the mt4 demos I have, aside from the
transaction taxes. if they're anyway similar to futures cfds they aren't worth trading
imo fx pairs especially with the 4-500 leverage are still the best bang for a buck
More...

Well I was not thinking about fx or mt4 at all.

I was thinking of stocks quoted in the form of CFD's by a real broker such as IB (outside North America) on a regular stock broker platform.

For example,

https://www.interactivebrokers.com/en/trading/pdfhighlights/PDF-CFDs.php?ib_entity=es

As I mentioned, CFD's are the predominant form for trading *stocks* at regular stock (not FX) brokers in a number of parts of the world.

IB notes:

"IB offers direct market access. Our professionally-oriented IB customers have the ability to add quotes to the exchange book, in the same way they would trading stocks. This is possible because IB will match all CFD orders immediately with a hedge-order. As a result a non-marketable CFD order will create a matching non-marketable order for the underlying share on the exchange. "
 
Quote from ddecker:

Not sure where the OP is located, but CFDs are not availble from IB in Hong Kong.



[1] https://www.interactivebrokers.com.hk/en/?f=/en/trading/pdfhighlights/PDF-CFDs.php
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....for HK residents, US residents, UK and Australian residents and Canadians.

It seems to me that this may be a temporary regulatory issue IB is having that would not extend to other brokers. Maybe they will clarify. I know that CFD's are huge in a number of these countries.

I guess that still leaves French, German etc. residents who can trade them anyway.........in a lot of ways the European traders have more freedom than anybody else. (Psst, as noted by the original poster, even U.S. residents can probably access CFD's by going through one of the few European brokers that still will take U.S. residents in a nominee account. There are some still.)
 
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