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. Majority of them are usually the regulated brokers. 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. However, this does not completely bar US citizens from opening account with international brokers. There are a good number of offshore international Forex brokers that accept US citizens. Below are some of the reasons why some offshore international Forex brokers do not accept us citizens.
Dodd-Frank Act
The Dodd-Frank Act is the recent federal statute signed by president Obama. It first became operational on July 21, 2010. It is a purely financial regulatory reform agenda. The act in itself has implemented new rules to be applied for regulating financial markets such as stocks, futures, options, futures and Forex.
Dodd-Frank Act states that for every Forex Brokerage Company that wants to offer trading service to us citizens must be registered with the Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA). This might prove very difficult to many offshore international Forex brokers. Obviously, as at to date there are a good number of Forex brokerage companies are not registered with neither of the regulatory body. This number is constituted by legal and regulated brokers. To avoid the paper mess, the stop accepting us citizen to open account with them. It is easier for them to decline the US citizens than incur the unforeseen expenses.
Dodd-Frank Act is the primary reason why most offshore international Forex brokers do not accept US citizens. 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. Most of these regulations are linked to the CFTC activities. The US government have directly implemented some of them. There are many other disadvantages of Dodd-Frank Act. 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 Way Out
Despite the restrictions imposed by the Dodd-Frank Act, some offshore international Forex brokers still accept us citizens. As a US citizen, you can still open account with some offshore international Forex brokerage companies not registered by either NFA or CFTC. However, this is done under certain different conditions. Non-US Forex brokers can only accept us customers to open account but only under their affiliate branches in US.
Conclusion
The regulation in 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 what it intended to do. It is also expected to enrich the US State Treasury since the funds invested won't be taken out of the USA borders.
Unfortunately, there are substantial disadvantage of this both to us citizens and government. First, the US citizens are significantly barred from using services provided by Forex brokers not regulated by US government. Secondly, for brokerage companies accepting us citizens, they have raised the minimum capital. The regulation has also resulted in unfavourable trading conditions for US citizens; reduced leverage and low spreads.
If you're looking for offshore brokers that accept US citizen, here's my recommendation: RoboForex review. They offer 1:500 leverage; something that you won't find in NFA regulated broker. If being unregulated is fine for you, I'd suggest you check out FxOpen review; it's a decent broker with quite high leverage and ECN account option with true DOM display.
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