To be honest I don't know what you're talking about. I've created this thread to list all the Fx brokers where you can open an account for your non-US entity. Owning a foreign corporation is legal. If your foreign corporation has a bank or brokerage account and the balance is over $10k anytime during the year then you have to file FBAR which you have to do already if you have a foreign bank account. If you have four $3k accounts then you still have to file FBAR. Nothing difficult. Of course you have to tell all the financial institutions that you are the beneficial owner of the company. Why would you like to hide that? I don't get it. As long as you're using your foreign Ltd/Ltc/Llp/etc. as it would be a domestic entity and you pay all the taxes, you're fine. Simple as that.
Correct, I didn't say it was illegal. I'm saying if your goal is to try to use a foreign corporation for trading purposes there is still a kyc (know your customer) process in which a brokerage will want to know any controlling party of that foreign corporation that owns more than 25% usually. I'm not saying to hide anything, If they see a us citizen with a controlling interest most won't take it on from my experience. I'm talking about firms like Dukascopy, LCG etc. My point is that it's a lot of trouble to go through with no guaranteed lasting result. Impossible, no. Difficult, definitely. Worth the effort, depends on your goals. Some offshore brokers (not bucket shops) will take you on if you meet the ecp status (see prior attached doc).
Pepperstone told me that they would take me. Other companies said to contact them in email and they'll get back to me. I didn't write them (yet) but I'm sure most of them would accept a foreign entity. Btw it's fairly simple to qualify as an ECP even if you don't have $10m. All you have to do is to form a private trust company in the BVI for a few grand. I'm not interested in Dukascopy because they're a bucketshop. They limit your maximum account exposure to $25 million and there is no way around it. They're a market maker broker and they're not even trying to hide it, just read their website thoroughly. LCG used to be a decent broker but not anymore.
Sorry maybe I missed it, but why you avoid trading with US brokers? Do you think brokers offering OTC instruments are better or have better liquidity?
I don't avoid trading with US brokers but foreign fx brokers offers lower spreads, deeper liquidity and lower costs. I'm talking about reputable brokers in AU, UK and NZ.
dw31583, could you please expand on the ECP loophole you mentioned? I was using IB for scalp trading and was very happy but now they require you to be a ECP in order to trade leverage forex in the US. So there are no US based brokers that suit my needs now. I am a dual citizen (US and UK) currently residing in the US but lived in the UK 3 years ago for a year and have a bank account setup over here. Is there a way for me to open an account with a UK forex broker?
You have been posting on the international tax thread about your quest for a tax free set up as a non us citizen but now you are one ? I noticed you were adamant to trade through a corporation, but as a US citizen, much of your posts there don't make much sense. Anyone feel free to correct me though.
Sure Luis, let me correct you. I'm a native European. I'm not a US citizen or resident. Whether you believe or not sometimes I like to know things about my field of work which may not be directly connected to me. Prepare yourself because you may gonna find posts where I'm talking about things / issues which are not connected to me. Why? - you may ask. Because I like to know more.
Based on my research, you can open an account with a couple of European and Australian fx brokers if you don't mind incorporating an LLC or an LTD in a foreign country. I'd recommend to choose a reputable jurisdiction because it will be easier to open a bank account for a company registered in Singapore than with a Samoa based entity. You should talk to the brokers before incorporating your offshore entity so you will know which place they gonna accept. Don't worry, I found many brokers that would open an account for your foreign registered entity. Don't forget to get a local address for your company though. This whole thing can be done for $1 - $1.5k. Let me know if you need some help.
Btw I'm aware of that the US authorities are trying over regulate the fx market to make it unaccessible for retail traders but the futures market is not half bad over there. I know it's not the same and this is what the authorities want (to make you trade futures instead of spot) but the CME and ICE currency futures are pretty liquid and the spread is 0.5pip on eur/usd. The CME eur/usd future's average daily volume is over $13 billion (over $550 million /hr, over $9 million /min) which isn't half bad so if you're looking for a cheaper option (then incorporating and maintaining a foreign entity) then you should try the futures market. InteractiveBrokers is the cheapest in terms of commissions but TradeStation is just a bit more expensive and you get a decent platform.