For US Citizens to trade FX throug non-US brokers you must be an accredited investor?

Discussion in 'Forex Brokers' started by PlusMinus, Dec 28, 2009.

  1. I spoke to a UK FX broker today who claimed they only accept US customers if they meet the NFA's definition (actually the SEC) of an "Accredited Investor".

    I have never heard of this rule before. Is it true that the NFA has some kind of restriction in place barring US citizens from trading with overseas FX brokers if they don't meet the Accredited Investor definition?

    I could not find any mention of this on the NFA website. Anyone want to take a crack at this?
     
  2. don't know about the US excepting 'they' reduced margin leverage but
    fxcm accepts US accounts: http://www.fxcm.co.uk/open-forex-account.jsp

    but: "British Columbia [Canada] residents are not eligible to apply with FXCM" http://www.fxcm.co.uk/open-forex-account.jsp
    BC regs have reduced trading leverage to 100 from 4/500 same as US
    BC regs require a broker to have a physical office in the Province in order to
    accept BC clients which has reduced the fx broker list to 3

    it really pisses me off that 'they' can restrict who i want to do business with -
    none-offshore, and control how i want to transact that business - leverage
    i've no idea how 'they' obtained the agreement of brokers in the UK although
    there are brokers in other countries who last time i checked were accepting
    BC and US clients however it seems to me regulators want to have a lot
    more control over currency speculators
     
  3. Well the broker I spoke with said you (a US citizen) can trade with a UK broker if you're not an accredited investor *if* that broker has a US presence that is NFA registered. FXCM fits that description, hence you're able to open an account with their UK division. However if you try a broker who has no NFA registered branch in the US and is based in the UK, then they supposedly would not open an account for you unless you were an accredited investor.

    The Swiss (or other smaller countries) apparently don't honor these rules. But to answer your question, how does NFA get foreign brokers to comply? The implication from the broker I spoke with was that the law applies to US citizens, and the brokers in foreign countries are able to honor the NFA rules or not. Since UK/Europe adhere to MiFID and probably work together to regulate various markets, it's easy to see why they force their own brokers to adhere to US regulations.

    What I'd like to determine is whether this is a real law/regulation that is applied to US citizens, and where is described in detail. Right now we're inferring from 3rd hand information.
     
  4. yea, obvious now you've pointed it out about fxcm / US originating brokers

    can't answer your question re: "What I'd like to determine is whether this is a real
    law/regulation that is applied to US citizens, and where is described in detail."
    try the CFTC, NFA ?

    i don't know there's an 'Accredited Investor' classification in Canada, here's there's the
    problem that each province regulates individually tho registration in Ontario is often
    accepted throughout the rest of Canada, fxcm does accept apps from the rest of Canada
    but as said not BC residents

    the only other thing i can think of is regulators attempting to make it harder for money
    laundering to be done which might be dispelled by the Accredited Investor classification
     
  5. This issue here won't be US law, but rather the laws of the country the broker is based in.
     
  6. So you're saying there is no US law barring citizens from trading with non NFA brokers overseas for any reason? Both could be true, could it not? This broker claims the rule is with the NFA and US citizens, and that they merely "honor" this rule.
     
  7. who's the broker ?