FORUMS BROKERS SOFTWARE
Home
 
    Forums > Trading for a Living > Career Trader > US Resident & UK FX Broker, Legally Possible?


Reply
 
Thread Tools
Old Oct 24th, 2012, 06:35 AM   #1
cornix
 
 
Join Date: Jan 2011
Location: Siberia
Posts: 3,558
Hello everyone,

Would appreciate any recommendations/information on the matter. The problem is following:

I manage OPM with UK based FX broker, but have several people willing to become clients who are US residents.

Broker says it's impossible due to US restrictions unless they are ECP (Eligible Contract Participants), which they are not.

I wonder is this situation really hopeless and I can't do anything but change to the US based broker in order to manage money of US residents or maybe there are some legal ways to avoid this restriction I could recommend to those people?
    Quote
Old Oct 24th, 2012, 07:33 PM   #2
comintel
 
 
Join Date: Jun 2008
Posts: 1,244
Quote:
Quote from cornixforex:

Hello everyone,

Would appreciate any recommendations/information on the matter. The problem is following:

I manage OPM with UK based FX broker, but have several people willing to become clients who are US residents.

Broker says it's impossible due to US restrictions unless they are ECP (Eligible Contract Participants), which they are not.

I wonder is this situation really hopeless and I can't do anything but change to the US based broker in order to manage money of US residents or maybe there are some legal ways to avoid this restriction I could recommend to those people?
U.S. law and the CFTC have forbidden foreign brokers from soliciting U.S. residents. Although this is not quite the same thing as forbidding U.S. residents from opening accounts abroad, the CFTC has sued maybe a dozen foreign brokers for breaking the law, so brokers are being cautious and not accepting U.S. accounts.

There actually are a very small number of foreign brokers that will accept U.S. accounts, but I am not aware of any large ones in the U.K. In fact, U.K regulators are assisting the CFTC in enforcing its prohibition.

So no, there is no prudent way around it.
    Quote
Old Oct 25th, 2012, 01:00 AM   #3
cornix
 
 
Join Date: Jan 2011
Location: Siberia
Posts: 3,558
Thanks.

That's pretty sad that basically you can only operate in the US to be able to take US clients, but looks like the only way to go as there is no alternative.
    Quote
Old Oct 25th, 2012, 06:37 PM   #4
DeeDeeTwo
 
 
Join Date: Dec 2007
Location: Toronto
Posts: 623
All you have to do is create an off-shore entity...
Preferably in a British territory somewhere...
And then open an institutional account with your UK broker.

If your US investors lend you money...
In other words, you sell them a convertible bond, etc...
(Which can be structured to participate in trading profits)...
They will not have to be identified...
Since they are creditors not owners.
    Quote
Old Oct 26th, 2012, 05:04 PM   #5
coreed
 
 
Join Date: May 2009
Posts: 103
Depending on the relationship you have with your clients (and critically the number), could you not manage their acct's on a power of attorney basis`?

You cannot withdraw money, but can make all trading decisions. It is just a private contract between you and another party. There are limits on the amount of clients you can 'manage,' before your fiduciary profile changes from a regulatory standpoint.
    Quote
Old Oct 27th, 2012, 05:08 AM   #6
cornix
 
 
Join Date: Jan 2011
Location: Siberia
Posts: 3,558
Quote:
Quote from coreed:

Depending on the relationship you have with your clients (and critically the number), could you not manage their acct's on a power of attorney basis`?

You cannot withdraw money, but can make all trading decisions. It is just a private contract between you and another party. There are limits on the amount of clients you can 'manage,' before your fiduciary profile changes from a regulatory standpoint.
Thanks. As far as I understand now, the problem is with them opening an account in the UK at all which I need to be done with the same broker as me in order to connect their accounts to my platform and be able to execute trades automatically (I'm FX scalper/day trader and execution speed matters enough to make it hardly possible to manually execute trades using several different trading platforms).

My current non-US clients use POA scheme and all works fine, the problem is rather how to make it possible for US clients to open an account with UK broker.
    Quote
 
Reply
Thread Tools

Forum Jump



   Conduct Rules   Privacy Policy   Sitemap Copyright © 2014, Elite Trader. All rights reserved.   

WHILE YOU'RE HERE, TAKE A MINUTE TO VISIT SOME OF OUR SPONSORS:
Advantage Futures
Futures Trading & Clearing
AMP Global Clearing
Futures and FX Trading
Collective2
Automated Trading Services
CTS
Futures Trading Software
dom993trading.com
NinjaTrader Consulting
eSignal
Trading Software Provider
FXCM
Forex Trading Services
Global Futures
Futures, Options & FX Trading
Interactive Brokers
Pro Gateway to World Markets
JC Trading Group
Direct Access Trading
MB Trading
Direct Access Trading
NinjaTrader
Trading Software Provider
optionshouse
Option Trading & Education
Rithmic
Futures Trade Execution Platform
SpeedTrader
Direct Access Trading
SpreadProfessor
Spread Trading Instruction
thenut-trader.com
FX, Gold, & Stock Signals
TradersStudio
System Building & Backtesting
Tradier
Equity and Options Trading
Trading Technologies
Trading Software Provider