US citizens can not open account with overseas Forex brokers

It is no secret that a good number of international Forex brokers have regulations that restrict US traders. A good number of international Forex brokers operating offshore do not accept US residents to open account with them. A good number of these brokers are the regulated ones. The reason for this will become very clear as we tackle every reason. There are strict regulations that limits doing business with US citizens. Most of these regulations originate from the US government. Fortunately, these regulations do not completely stop international brokers from accepting us citizens. There are a good number of offshore international Forex brokers that accept US citizens. Below is the primary reason why some offshore international Forex brokers do not accept US citizens.

Dodd-Frank Act

The Dodd-Frank Act is the most recent federal statute which president Obama signed into law. It first became operational on July 21, 2010. It is a reform agenda which is purely developed to regulate financial market. The act brought forth new rules that are designed to regulate all financial markets including stocks, futures, futures, options and Forex.

Dodd-Frank Act requires that every Forex brokerage company who wants to do business with US citizens must first be registered with both Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA). Many international Forex brokers find this very difficult for them. The recent statistics shows that a good number of such international brokers are still not registered with these two us regulatory bodies. These are mostly legal and regulated offshore brokers. To avoid the paper mess, they stop accepting us citizen to open account with them. It is easier for them to decline the US citizens than incur the unforeseen expenses.

The primary reason that has forced international offshore Forex brokers to decline US citizens is the implementation of Dodd-Frank Act. There are also other reforms and changes in the financial market services that US government have provided barring their citizens from opening account with international brokerage companies. Several of these regulations have direct link to CFTC activities. The US government have directly implemented some of them. Besides this, the Dodd-Frank Act has many other disadvantages. Due to this regulation, many foreign banks not able to continue accept US clients. Secondly, most Forex brokerage services have significantly changed the minimum account trading, leverage, and spread levels for US citizens.

The Solution

Despite the restrictions imposed by the Dodd-Frank Act, some offshore international Forex brokers still accept us citizens. If you are a US citizen, there are chances you can open account with such international brokers not registered by US regulatory bodies – NFA and CFTC. However, this is done under certain different conditions. Such offshore brokers are only allowed to accept US clients only under their US -based affiliate brokerage firms.

Conclusion

The regulation of offshore Forex brokerage companies requiring them to be registered with the Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA) before accepting us citizens has both its advantages and disadvantages. The primary advantage is that the regulation ensures the safety of us residents’ funds. This is the intention of the regulation. Besides, it is expected that the US State Treasury will enrich itself from the regulation because the invested funds cannot leave the USA borders.

However, the regulation has other several disadvantages to both the US citizens and government. First, the services of international brokers cannot be enjoyed by US citizens if such brokers are not regulated by US government. Secondly, the brokers who currently accept us citizens have substantially raised their minimum capital requirement. As a result of this regulation, US citizens are now subjected to unfavourable trading conditions; low spread and reduced leverage.

Article Source: www.findyourfx.com

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One Response to US citizens can not open account with overseas Forex brokers

  1. Janell says:

    Hello, just wanted to tell you, I loved this article. It was inspiring.

    Keep on posting!

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