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CFTC Forex Rules In Effect October 18, 2010

Discussion in 'General Forex Talk' started by fxguy77, Aug 31, 2010.

  1. britpip

    britpip Recruit

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    pdf request

    Dirk - please send me a copy of the pdf to dlcinvestments@gmail.com - many thanks.

    Another option that I am looking into is setting up a UK account and running a spread bet account - one of the "brokers" Spreadbetting, Forex and CFD Trading with Smart Live Markets is allowing trades through an MT4 platform. Proceeds for the profits should be tax free (need to be a UK citizen to be able to set up the account and qualify although some EU countries do allow spread betting but not tax free on the profits) but as yet I have nothing on rules for a limited company placing spread bets.

    Another option is to open the account with someone you trust in the UK and then trade as normal - of course the IRS will insist that you volunteer any offshore account details that you are a signature to. The funds would need to stay in the UK, although you can always have a joint bank account with credit cards that are paid from the UK account if you follow the drift.

    Possible option is to open up a ROTH IRA and invest in an oversees forex account - this is also tax free on any profits but you must follow the ROTH IRA rules for withdrawls, etc.

    There are probably many other ways of skinning this one "legally".

    Cheers - David C.
    "To live with Passion, it takes Courage and Grace to survive.
     
  2. Pete B

    Pete B Private

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    Dirk, please send a copy of the pdf. you mentioned to my email: internationalcommoditiesltd@yahoo.com. Thanks very much.
     
  3. m r p

    m r p Recruit

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    I don't see anything in the links provided or the Q&A that remotely suggests the CFTC has authority over the retail customer. The Q&A does mention this:

    "The Dodd-Frank Act further modifies the list of eligible counterparties by eliminating insurance companies and investment bank holding companies. Moreover, where the list of eligible counterparties previously included “financial institutions,” the Dodd-Frank Act specifically provides that among financial institutions, only United States financial institutions are permitted to act as counterparties."

    ...which, to me, reads to me as an explanation/list of counterparties permitted to register with CFTC and, in short, do business on US soil and under CFTC's authority. Nowhere does it state that US citizens are limited to US brokers.

    Examined from a wider perspective, the idea of US citizens only permitted to do business with US brokers is...well, that's a hard sell, even for our current government. It would mean US brokers can do business with US citizens and the rest of the world. It would mean foreign brokers can do business with any retail customer in the world (except the US citizen). Meanwhile, the US citizen is limited to the US broker. It would be a crippling handicap for...the US citizen and no one else.

    Considering how apesh*t we went over a proposed leverage reduction I can't imagine they'd even attempt that in a dream. At least, not yet...I'm going to editorialize for a minute; scroll down to the bottom if you're not interested.

    One of my favorite expressions of all time is "litigation causes legislation." Courts are obligated (at least on paper) to protect the taxpayers: being tied up in a manner deemed excessive or inappropriate (by the court) will, invariably, bring about legislation to prevent future loss of court/government resources (which are funded by taxpayers). Was legislation prohibiting cell phone usage while driving passed because people look stupid while doing it? No...legislation came about because courts were being tied up in injury-related lawsuits and criminal cases. Same thing happened with seat belts way back when.

    If there is to be further forex regulation in the future, you can bet it will be brought about by excessive litigation brought about by forex scams, fraud, that sort of thing. PROTECT YOURSELVES NOW, I can't stress that enough. Let's say you get involved with a shady broker & have to sue to get your money back. That's an awful scenario, but you know what's worse? Not being able to make money in the future because courts impose new regulations because too many people - like you - got scammed.

    Be careful. Read the information on this Web site. Research. Listen to your gut if you have a bad feeling about something. Think before you act. And know your weaknesses: more so than others, this market has elements that attract those of us with a compulsive side. If you only read one sentence out of this entire post, I sincerely hope it's this one: if you have a financially compulsive side that you cannot curb, you need to forget you ever heard about the forex market.

    /END EDITORIAL

    This is the beginning of the government regulating the forex business as it does every other; so far there is nothing in the new legislation that's dramatically unreasonable to retail customers (20:1 kinda stinks but I maintain that we can go offshore). My interpretation of the new reg based on what I've read so far is that we (US retail customers) can go with whatever broker we want.

    Has anyone called the 202-418-5080 listed on the Q&A footer and asked? I would but I'm guessing they're closed for the week...
     
  4. Forexwatchman

    Forexwatchman Sergeant

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    Sorry to burst everyone's bubble, but this has a bigger scope than just moving your account offshore. This means that any brokers who have registered with the NFA/CFTC/BIGGER BROTHER in the U.S. will have to abide by their leverage rules or lose their membership. That obviously means that all offshore brokers have to consider the consequences of holding U.S. accounts with contradictory leverage amounts.
     
  5. PipStar

    PipStar Sergeant

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    It is all a conspiracy against the small retail forex trader from the start. By proposing 10-1 leverage there is outrage and a coalition against the new rules. Then they make as if they listened to the objections and finally decide on 50-1 so they make it appear as a 'win' for traders. In fact it is a complete loss of rights and freedom to trade as we wish. The real target was always 50-1 and it is just a way by the regulator to make people accept it by making them think that traders have fought for higher leverage and 'won'. Nice strategy to make people accept what they do not want because they then think it could have been worse. That's a great exercise in psychology !!!!!!
     
  6. m r p

    m r p Recruit

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    I've read several pieces so far today that support this in concept, but...there's still no CFTC authority over offshore brokers (from what I read earlier, they're supposed to register to do business w/ US citizens, but CFTC can only complain if they opt not to), and no CFTC authority precluding the US citizen from opening an high-leverage account with one of them, yet.

    How could this come about? Option 1. CFTC makes it illegal for me (the average US citizen) to use an offshore broker. Option 2. CFTC convinces every regulatory/enforcement agency in every non-US country there is to enforce our rules (w/ regards to US clients) on their soil.

    Option 1: The CFTC probably could eventually gather the clout necessary to propose to make it illegal for me to open an offshore forex account. But really, seriously think about what that would mean for a second. That's one of the most impractical, far-reaching, un-American concepts I can imagine. Imagine the ensuing political mushroom cloud; people would literally lose their minds. Folks would suggest we're on the road to losing our freedom to invest in foreign stocks and open Swiss bank accounts. US-based Internet companies would start rumors that citizens can't engage in Internet transactions with non-US Internet companies. All other US-based brokers (talking about non-forex brokers here) would attempt to generate similar legislation governing their particular markets. Blowback would be such a nightmare I can't fathom anyone thinking it's practical or even possible.

    Option 2: This one leaves room for all kinds of speculation. The only entities that force offshore brokers to play by CFTC rules are the brokers' respective regulatory/enforcement agencies (which the CFTC can only complain to). Each one has the freedom to act independently of the others (from what I'm aware of, at least). So...what's going to happen? What happens if the regulatory agency in Country A agrees to enforce CFTC requirements within their jurisdiction? Do nations B - Z follow suit, or do some/all opt to hold out, capitalizing on the fact that their nation's competitive edge increases every time another nation joins the CFTC fold? What happens if every nation out there tells the CFTC to pound sand?

    Anyone who's heard anything or has any ideas I'd love to hear them...my partially-educated guess at this time (always subject to change) is that these rules will affect US-based brokers only. The US retail customer should be off the hook for now, and since the CFTC is toothless when it comes to non-US brokers, the non-US broker can elect to remain unaffected, unless [big wild card here] their nation's regulatory agency opts to get crazy.
     
  7. 5of7

    5of7 Representative for TheCollectiveFX

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    It is a little more complicated, we've actually had SEC attorneys working on it for about 8 months, just as insurance to make sure we could keep trading the way we like.

    Even we (a collective) had to go through some regulatory hurdles.

    But you have to be careful we don't force the government's hand and doing what they did gambling, and restricting US citizens from holding offshore accounts.

    -Trader 5of7 of TheCollectiveFX-
     
  8. Pharaoh

    Pharaoh Colonel

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    Hey 5of7,

    Can you give us more info on exactly what an STP license entails? Also, for those of us who like to test the limits of sanity, a link to the appropriate SEC regs? I'm sure I'm not the only one who wants to learn more about this.
     
  9. 5of7

    5of7 Representative for TheCollectiveFX

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    The final details, and last hoops will be jumped through in the next few weeks. Until then, I personally am a little tired of other brokers piggy-backing off our efforts. Last time we broke ground into a new liquidity provider, a bunch of brokers came over and ruined it for us all.

    The big post I made was the copy of an email we posted to our members to assure them that we weren't surprised by any of it, and had everything in control.

    Our big advantage in all of this was that we truly were fully STP at all times, and we can show it in server logs, etc. I honestly don't know any other broker out their that wasn't counterparty (even the so-called "STP" brokers).

    There is a storm coming. This is the beginning. The main thing for me is that the collective be clean, and prepared to protect me, so I and the other members can keep doing what we love.

    Msg me privately and I'll tell you more. But I am not going to do anything to jeopardize what we've got. You can understand.
     
  10. Forexwatchman

    Forexwatchman Sergeant

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    m r p Thanks for your input and just know that I certainly hope you are right with regards to how far the black hand of the CFTC can reach global financial markets. I rarely do this but to sum up my stance on this issue, i's going to express some personal beliefs with regards to the bigger picture happening here.

    To put it plainly, this is one example of a much bigger trend in the push for widening the gap between the middle class and the upper class in America, the richest nation on the planet. So what happens here can certainly be expected to also at least get encouraged to happen in any other country that is on "good terms" with us.

    Never before has the gap between the middle class and the upper-class been so wide, and this is by design. Captitolism is a failed dream, and we are a reflection of that fact.

    And to relate it back to forex, let me ask readers a question. How many other self-taught professions can offer you the same potential and freedom that forex can offer? How close do you think forex is to actually reaching the masses of people that could potentially take benefit from this market's existence? The answer scare the CFTC and NFA so much, that you get what we have here.
     

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